What Is Social Media ROI?

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What Is Social Media ROI?
Stefan Ivanovic

Article by

Stefan Ivanovic

Mar 4, 2017

ROI (return on investment) is basically what you get back from all the time, money and resources you invest in social media marketing.

Determine Your Goals

First thing you should do is determine a realistic goal for your ROI. If you want to reach 100 000 followers, or, ideally, get return in the form of dollars.

Reaching any of these goals is not going to be an easy work so prepare to analyze a lot of data.
Key examples of social media metrics to track include:

• Reach

• Site traffic

• Leads generated

• Sign-ups and conversions

• Revenue generated

I recommend to reach the 3 most important goals:

1. Increase activity on your social media profiles – likes, comments, retweets etc.

2. Increase number of direct visits to your website – from link clicks.

3. Increase brand awareness - make people recognize your brans logo.

An independent study by Altimeter revealed that many organizations avoid focusing on social media ROI because of:

• 56 percent: an inability to tie social media to business outcomes

• 39 percent: a lack of analytics, expertise and/or resources

• 38 percent: poor tools

• 35 percent: inconsistent analytical approaches

• 30 percent: unreliable data

Assign a monetary value

Once you’ve chosen a goal and tracked the actions, it’s time to tackle the dollars-and-cents side of ROI. There are several different methods to choose from here:

• Lifetime value – How much do you earn on average from a customer? (There’s a quick calculator here, and a helpful article here.)

• Lifetime value, multiplied by conversion rate – How much is each potential visit worth to you?

• Average sale – How much is the average purchase through your site?

• PPC costs – How much would you end up paying if you were to use ads to achieve the same social media actions?

How to Calculate Your Investment

While it’s true that participation on Twitter, Facebook, and the like is free, your time is not. Your social media tools may not be. And your ad spend is worth real dollars.

• Your time – Multiply labor-cost per hour by the number of hours you’ve committed over a given period (depending on whether you’re measuring social media ROI for the week, the month, per campaign, etc.). Salary.com found the median hourly rate for social media managers to be $51.

• Your social media tools – Add up the costs of all the tools and services you use for social media. Find the weekly or monthly costs using a bit of math (divide annual fees by 52 for the weekly cost, by 12 for the monthly cost).

• Advertising spend – The amount you spend on social media advertising—boosting Facebook posts, promoting tweets, etc.

All these costs added together will equal your investment.

Special thanks to Buffer and their text The Delightfully Short Guide to Social Media ROI

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