Show and Enhance Social Media ROI (+ Free Instruments)
As a social marketer, you already understand that social media brings value to your organization. But can you measure the ROI of your social media marketing efforts? Social ROI can often be tricky to prove.
LinkedIn research found that 58 percent of digital marketers have to prove social media ROI to get approval for future budget requests. However, only 37% were “very confident” in their ROI metrics.
Measuring social media ROI is also key to building and refining your social marketing strategy. It shows you what’s working and what’s not—allowing you to shift resources and tactics to be more effective.
In this post we’ll give you the tips and tools (including a free ROI calculator) you need to prove and improve social ROI.
Bonus: Download a free guide and checklist to help you convince your boss to invest more in social media. Includes experts tips for proving ROI.
Social media ROI definition
ROI stands for “return on investment.” Social media ROI represents the return on investment from your social media activities.
Generally speaking, social media ROI is a measure of all social media actions that create value, divided by the investment you made to achieve those actions. After all the time, money, and resources put in—what’s the return?
Here’s a simple formula for how to calculate ROI for social media:
Value / investment (people hours, ad budget, etc.) X 100 = social media ROI (as a percentage)
Exactly how you calculate ROI depends on your organization’s objectives (brand awareness, revenue, customer satisfaction, etc.).
That’s why the formula above uses value, rather than revenue or profit, as the starting point.
For example, Johnsonville Sausages has an extensive social listening program. They use social to gain insights into what kinds of new products they should be developing.
Rather than using a financial calculation, they base the ROI of their social listening efforts on how much information they are able to share with the product development team. The value is in the intelligence gathered, rather than in sales or revenue.
We appreciate your vote …..sharing this along with our product teams. ????????
— Johnsonville (@Johnsonville) July 5, 2020
Here’s how to measure social media ROI for your business.
Step 1: Define clear social media objectives
This is where you define what value, in terms of social media results, means to your brand.
According to Altimeter, only 28 percent of organizations feel they can attribute value to business outcomes driven by social media. Clear social media objectives help you define how social actions align with business and departmental goals.
Think about various ways your social media investment might create value, like
- Business conversions (such as customer acquisition or lead generation)
- Brand awareness or perception
- Customer experience and loyalty
- Employee trust
- Partner confidence
- Security and risk mitigation
Make sure to consider all your social audiences in your objectives. It’s no surprise that the Altimeter survey found customers and a brand’s community to be the main audiences for social media. But employees, suppliers and partners, and shareholders were all identified as important audiences, too.
If you’re not thinking about all your social audiences, you’re missing out on value when calculating your ROI.
Step 2: Set smart goals
Once you’ve established clear objectives that link your social media ROI to real business results, you need to set goals. What’s the difference?
Objectives define where you want to go. Goals define how and when you will get there.
Here are a few simple examples:
We recommend using the S.M.A.R.T. goal-setting framework. Each goal must be:
- Relevant, and
For example, if you want to improve customer service on social media, set a number and a deadline. So, for example: “We will speed up our first response time by 10 minutes by the end of the year.”
If your objective is to grow conversions, a good goal might be a specific number of leads you want to drive via social for the quarter. Or, maybe increasing landing page conversions by 10 percent by the end of the year.
Whatever the goal, be sure to measure past performance to establish benchmarks. Then set targets for improvement. And be clear about how much value each goal brings to your brand.
Step 3: Track the right performance metrics
You need to track social media metrics to determine whether you’re achieving objectives and meeting your goals.
So-called “vanity” metrics—such as likes, comments, and shares—get a bad rap, but they can have value. Use them to gauge the overall health of your social presence, measure yourself against competitors, and determine what content is resonating with your audience.
They should only be considered “vanity” metrics if they don’t align with your business objectives.
Other metrics you could track to prove ROI include:
- Audience engagement
- Site traffic
- Leads generated
- Sign-ups and conversions
- Revenue generated
When deciding what metrics to use, ask yourself:
- What kinds of things does the target audience do after exposure to a campaign?
- Does this metric align with my objectives?
- Does it help me make decisions (what to do more of, what to do less of, etc.)?
- Do I have the capacity to measure it effectively?
Check your metrics regularly. You can have reports sent to your inbox on specific days of the week so you don’t have to remember to pull them yourself.
But make sure sure to measure your returns over an appropriate period based on your sales cycle. LinkedIn research found that 77% of digital marketers measured the results within the first month of a campaign, even when they knew their sales cycle was three months or more.
However, Oracle Data Cloud found that only 47% of a campaign’s value is realized in the first four weeks.
Source: Oracle Data Cloud
If you calculate your social media marketing ROI too early in a campaign, you miss out on value that comes later. Don’t sell yourself short!
Step 4: Calculate how much you spend on social media
You need to understand your full investment in social media to determine whether you’re getting a good return. There are several key things you need to include:
Cost of tools and platforms
Most social networks are free to use, but do you pay for a premium version of a social media management platform?
Budget allocated to social ad spends
This is the easiest thing to track, as the cost of each boosted Facebook post or Instagram ad is recorded in the platform’s ad dashboard. If you’re running ads across multiple networks, you can use a tool like Hootsuite Ads to manage each campaign and measure ROI from a single platform.
How much did it cost to produce the materials you shared on social during a specific campaign? Did you have in-house writers or freelancers create blog posts? How much does the writer make an hour? How many hours did it take to produce that blog post? Include time for your editors and content strategists, too.
Time spent by your social media team
From meetings, to posting and promoting content, to running ads—add it all up. You can do this for a specific timeframe to determine the ROI of a campaign, or calculate how much time your business spends on social media every month or year. Don’t forget to include training.
Agencies and consultants
If you use them, include their fees in your calculation. Use the relevant portion of their fee for the campaign or time period.
Step 5: Create an ROI report
Only 60% of digital marketers actively share their social media ROI results, according to LinkedIn research. That means 40% do not.
When it comes to your ROI metrics, it’s always better to share. Learn how digital marketers can be more open about their reporting. https://t.co/aqC3X2RlSu pic.twitter.com/ls3dNdobpO
— LinkedIn Marketing (@LinkedInMktg) November 22, 2019
But reporting your ROI has real value for your team and your budget.
Start by returning to the ROI formula we shared earlier in this post. We’ve also got some tools at the end of this post that will help you track and calculate ROI.
Here are some tips for creating a great social media ROI report.
Use a template
Analytics templates allow you to track metrics without having to build custom reports for each campaign.
Use plain language
Not everyone understands social media data as well as you do. So, it’s important to present information as clearly as possible.
Speak to the relevant business objectives
That’s why you defined them at the very start of this process.
It’s much more compelling for your boss to hear: “Our goal is to increase pipeline revenue by 10 percent and here’s how social media contributes to that,” than it is to hear: “Here’s how many shares our posts on Facebook got this month.”
Be clear about what you can—and cannot—do when it comes to measuring the ROI. Demonstrate what’s possible with the data you have, but be clear about what’s not possible to measure too.
Don’t forget to set expectations correctly for the timeframe: you can’t demonstrate three-month sales-cycle value after one month of a campaign.
Measuring the ROI of social is about justifying past actions. But, again, it can also help optimize your strategy going forward.
Here are a few more quick tips and resources for improving ROI.
1. Test and optimize
Are you running social ads? Experiment with different audience segments and ad formats.
There are countless things you can tweak to see which deliver the best results, as we describe in our guide to A/B testing. As you report your social media marketing ROI, make it clear what you are learning and how those lessons impact value and returns.
For example, when charity:water started using Facebook ads, they didn’t hit their ROI revenue goals right off the bat. In fact, it took nearly a year. But during that year, they consistently gained value by learning what worked and did not work for their organization.
“We definitely saw glimmers of ads that worked throughout the year,” said Amy Zhang, senior manager of demand generation. “We just continued to iterate and test whatever we could—audiences, ad copy, messaging, images, videos, carousel ads, etc.—until we hit success.”
In the end, they reached a 5x return on ad spend.
2. Use data to test hypotheses
This also plays into using ROI to tweak your marketing strategy over time.
For example, you may notice that tweets featuring more than one product photo tend to get more conversions. Or that giveaways seem to outperform your “how-to” content.
But are you sure? Start by clearly formulating your hypothesis and writing it down.
Next, set up data measurement capabilities to prove whether your hypothesis is correct or not (using the tools below).
If your hypothesis requires a new strategy or investment, propose a low-risk pilot program. Leaders might be more willing to try something new if they don’t have to make a long-term investment and commitment before seeing results.
Social media is always changing.
The content, strategies, and channels that you use to connect with your audience today might not be effective tomorrow.
You need to update and adapt your strategy over time. Are customer needs and pain points changing? Has your business shifted priorities or resources? What new platforms and technology are changing the way your audience is using social media?
All these factors will impact how you earn a good return on your social media investment.
Remember that simply gathering this information itself brings value to your organization.
4. Remember the big picture
Don’t get so caught up in chasing short-term ROI that you lose sight of what makes your brand valuable and unique.
“We don’t do things just for a short-term return,” said Marc Verschueren, the online marketing and sales director at Happy Socks. “Everything has to be on-brand, otherwise it will harm the brand in the long-term.”
The sock brand’s posts are instantly recognizable, and they’re not all about making immediate sales.
Seventy-eight percent of respondents to the Altimeter survey mentioned earlier said social media had improved brand health. That’s a real source of value.
Social media ROI tools
Now that you know the theory behind measuring social ROI, here are some tools to make the process easier.
Social ROI calculator
We built this free tool to help you calculate the return on your social media investment. You can use it to measure ROI for a paid or organic campaign.
Source: Hootsuite social roi calculator
Just plug in your numbers and the calculator does all the math for you, giving you the ROI as a percentage.
This handy free tool from Google is a must for tracking website traffic, conversions, and sign-ups from social media campaigns.
It allows you to go beyond one-off actions and track the value of your social campaigns over time by creating and tracking a conversion funnel.
Add these short text codes to a URL to track important data about website visitors and traffic sources.
Combined with analytics programs, UTM parameters give you a detailed picture of your social media success, from a high level (which networks are performing best) down to the granular details (which post drove the most traffic to a specific page).
You can add UTM parameters to your links manually (check out our tutorial) or using link settings in Hootsuite.
This is a piece of code for your website that allows you to track conversions from Facebook ads—from leads to sales. That way you can see the full value each Facebook ad creates, rather than just clicks or immediate sales.
You can use the pixel feature within Facebook’s own ad platform or with social ad optimization and targeting tools like Hootsuite Ads.
Learn more about the Facebook pixel in our detailed guide.
Hootsuite Impact helps you measure social media ROI across paid, owned, and earned social channels.
Impact connects to your existing analytics systems so you can integrate social data with the rest of your business metrics. It makes producing reports easy, and delivers plain-language recommendations to optimize your social strategy.
Hootsuite Insights Powered by Brandwatch
This tool helps you identify conversations and trends within your industry, as well as reach, brand sentiment, and more. It’s backed by 100 million data sources, real-time results, and an easy-to-use interface.
These data points can help you measure ROI for business objectives related to brand health.
Use Hootsuite Impact and get plain-language reports of your social data to see exactly what’s driving results for your business—and where you can boost your social media ROI.
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