How to Measure the ROI of Social Media Marketing
The Internet has made it easy to monitor and track the results of almost every marketing strategy, which is great for data-minded marketers. It gives your company the ability to identify top-performing strategies and allocate your budget based on which channels produce the best results.
However, not all marketing strategies are designed to produce the same results. This is especially true with social media marketing, where goals are typically more focused on generating brand awareness and improving customer engagement than directly driving revenue.
If you’re accustomed to measuring ROI in terms of dollars, social media marketing may seem like a waste of your company’s budget – but that isn’t the case.
Measuring the ROI of social media marketing simply requires a different approach than most other channels.
Call 888-601-5359 to speak with a strategist about social media marketing plans from WebFX, or keep reading to learn more about measuring your results with social channels.
How much does social media marketing cost?
The amount your company spends on social media marketing depends on several factors, the most significant being who is responsible for it.
If you manage all of your accounts in-house, you can figure out the cost by determining how many hours per week your team spends posting updates, creating ads, and responding to comments and other interactions. You can either measure the time spent in hours, or use an estimate of their hourly pay to calculate how much it costs your company to maintain your social accounts.
If you decide to hire an agency, on the other hand, calculating costs is much simpler since they’ll send you a bill (or charge a set fee) every month. Most social media agencies today charge $1,000 - $2,000/month for full management.
In addition to the cost of managing the free aspects of your social media pages, you may also choose to take advantage of the advertising options on one or all of the platforms you use.
Depending on how many ads you run and the competitiveness of your industry, this could add anywhere from a few hundred to several thousand dollars to your monthly budget. That being said, it’s easy to set limits for each platform (much like on Google AdWords) to make sure you don’t spend more than a predetermined amount.
What kind of results does social media marketing produce?
Before you can measure the success of your social media marketing strategy, you need to determine how you’ll measure the results. Unlike most channels, which are designed to drive purchase and leads directly, social media campaigns are typically designed to drive engagement.
Select a few metrics to monitor regularly that reflect your social media goals. There are many to choose, including:
One of the main goals of social media marketing is to grow brand awareness. By monitoring reach, you can track how many people have seen your content on each platform.
Engagement measures how many users click, like, comment on, or share your content during a set time period. This may not seem important if you’re focused on generating revenue, but having an engaged audience on social media can build long-term relationships that produce revenue in the long run.
If you use social media to promote a campaign or page on your site, you’ll want to monitor the amount of clicks to your site it produces. This is easy to measure on every platform, and it can give you a concrete way to calculate your cost per site visitor.
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How can you measure the ROI of your social media marketing strategy?
With most channels, you can calculate your ROI by dividing the amount of money you earn from a campaign by the amount you initially invested in it.
If you run ads on the platforms that are designed to generate sales, you can use this same formula. Simply divide the overall spend for your ad campaign by the amount of revenue it generated, and you have your answer.
For the rest of your strategy, however, it isn’t that simple. Sure – the hours your team spends writing and sharing updates, interacting with customers, and responding to questions might cause one or two people to go to your site and buy something. But if you compare the revenue from those few sales to the cost of your social media strategy, it probably won’t look like much.
In order to get a more realistic picture of how well your social media marketing strategy is performing, compare your investment to the reach, engagement, and website clicks it produces.
For example, let’s say your company decides to spend $1000 per month on social media management services and another $1000 per month on Facebook ads. At the end of the month, you check your site’s analytics and see three conversions from social, with a total value of $200.
If this was the only information you looked at, a return of $200 from a $2000 investment would seem like a waste.
But if you went to your Facebook insights and saw that your posts reached 250,000 people, generated 1000 engagements, and sent 3000 visitors to your site, would you still think that?
If building brand awareness and improving customer relationships are a priority for your company, probably not.
Of course, the metrics you choose to monitor and compare depend on your company’s goals, and you may decide that you still want to focus on generating conversions. But in most cases, measuring the ROI of social media marketing is best done in a way that accounts for the channel’s place in your overall strategy.
Want to improve your company’s social media marketing strategy?
No matter what your social media marketing goals are, our experienced team of social media marketers can help you reach them. Contact us today to speak with a strategist about how your company can use social media to grow brand awareness and reach new customers.