How to Measure Your Social Media Advertising ROI in 8 Steps

As one of the top digital marketing channels for businesses, social media is a critical component in your company’s success. That’s why it’s essential for your team to track your return on investment (ROI) from not only marketing on social media but also advertising.

How do you measure social media advertising’s ROI, though?

Keep reading to get a step-by-step walkthrough on how to measure the ROI of social media advertising. Plus, learn how to improve your social media’s ROI, as well as tips for how to show company decision-makers that social media is worth the investment.

If you need professional help when it comes to social media advertising, contact WebFX. We not only bring more than 25 years of experience to social media advertising but also more than 500 talented digital marketing professionals. Give us a ring at 888-601-5359 or contact us online!

What is social media advertising ROI?

For every business, the ROI of social media advertising is different. It’s calculated the same way, though:

Revenue / Investment x 100 = ROI

As a reference, here is a breakdown of the ROI formula:

  • Revenue: Your revenue is the amount earned by your company from social media. For example, maybe your ad campaign generated 25 sales, resulting in $300 worth of revenue for your business.
  • Investment: Your investment is the amount invested by your company into a social media ad campaign. It can include not only your ad spend but also your labor, marketing software, and more. For example, maybe you spend $200 on ads, plus $50 on a software subscription.
  • ROI: Your ROI is the amount earned back by your company from social media. It displays as a percentage. If your business earns more than zero percent back, then you’ve made back some of your investment. If it’s below zero, you haven’t.

To put social media advertising ROI into perspective, here is an example with actual numbers:

$300 / $250 x 100 = 120%

In this scenario, your company earned back 120 percent of its investment.

Even though ROI formulas focus on your bottom line, many companies consider the non-financial returns of an ad campaign. For example, your business may focus on a campaign’s brand awareness or user engagement versus the number of sales.

That’s why your team needs to decide, before measuring your ROI, what matters to your business.

Why does social media advertising’s ROI matter?

In any digital marketing channel, from social media to content marketing, it’s essential for your team to measure your ROI. For your department, as well as company decision-makers, you want to demonstrate that your strategy offers a significant benefit.

Plus, your social media advertising’s ROI provides insight into the performance of your campaign. It can alert your team to a low-performing campaign, which can help you discover ways to improve your strategy and its results.

If you don’t monitor the performance of your ad campaign, you risk turning your investment into a waste. Maximize the success of your social media advertising campaign by measuring your social media ROI on a consistent, routine basis.

How to measure your social media advertising ROI

Ready to learn how to measure your ROI from social media advertising? Follow these eight steps:

1. Build a social media budget

Companies will often experiment with social media, without setting a budget. While it’s helpful to try new ways to promote your business to consumers, launching a strategy without an in-house budget can make it difficult to measure your actual ROI.

For example, your company may create an ad campaign with a $50 daily budget. Later, however, you decide to increase that amount to $150. While you have a designated budget for your campaign online, you haven’t committed to one in-house.

Before you launch any campaign, determine how much your business wants to invest.

If you’re developing a full-scale advertising campaign for social media, your team will need to coordinate with company decision-makers on a budget. Before proposing a number, your team should also research the average costs for social media advertising in your industry.

Your budget should consider a few features, including:

  • Ad spend
  • Software
  • Labor
  • Training

If your business decides to partner with a social media marketing agency, you also need to research the costs of their services. For companies advertising on multiple social media platforms, a social media marketing agency can reduce your team’s workload and improve your strategy even more.

2. Set S.M.A.R.T. goals

Once you have a social media advertising budget, you need to decide what you want to accomplish with social media. Does your business want to drive purchases or engagement? What do you want from your campaign in six months?

For the best results from your campaign, focus on building S.M.A.R.T. goals:

  • S: Make your social media advertising goal Specific. Your goal should answer the five W’s: who, what, why, where, and which. This kind of goal provides your team with a solid foundation for promoting your company on social media.
  • M: Create a social media advertising goal that’s Measurable. This factor is critical when it comes to measuring social media ROI. Your goal should include a number, whether it’s earning a certain amount of sales, followers, or conversions.
  • A: Launch a social media advertising goal that’s Achievable. You want a goal that’s realistic but also pushes your team to perform. If you’re unsure about an achievable goal for social media, you can always chat with a consultant.
  • R: Build a social media advertising goal that’s Relevant. A relevant goal should coordinate with your organization’s long-term business strategy. If your goal doesn’t support your company’s current direction, it can prove challenging to gain support for social media.
  • T: Set a social media advertising goal that’s Timely. Every goal should have a deadline to determine when you want to achieve it. For social media, you can create a one-year goal that ties into a three- or sixth-month goal.

For the best results, spend some time brainstorming potential goals for your social media advertising campaign. Remember to consider what matters to your company, as well as your target audience. It’s also critical for your team to develop a goal and strategy that builds on social media’s strengths.

3. Determine a monetary value

Now that your team has your budget and goals set, you need to think about the value of user actions. These actions, which can range from a sale to a follow to a sign-up, all have an impact on your social media’s ROI.

While it’s easy for your team to estimate the value of a sale, it requires more effort to determine how much a follower, for example, is worth to your business. If you’re new to social media advertising, your company may not know, as you don’t have any data on whether a new follower will become a customer.

Instead, your team may reference industry averages. If you’re partnering with a social media advertising agency, they can also provide your business some insight into the value of a follower gained through paid ads.


In addition to considering the value of these actions, your team should also think about the lifetime value of a customer. If your social media ads bring new business to your company, how much are these shoppers worth long-term?

If your team can compile all this data, it can have a massive impact on your social media advertising ROI calculations. Even better, this information can help demonstrate to company leaders that social media is a digital marketing channel worth their investment.

4. Create a starting benchmark

The next step in measuring your social media advertising’s ROI? Take a “before” snapshot.

With a reference point or benchmark for your social media, you can see and measure the impact of your social media advertising strategy. This is a valuable step to take before launching your campaign, which is why your team should not skip it.

If you’re already running an advertising campaign, but are relaunching it, it’s still worth logging your current performance. That way, you can see how much of a difference your new campaign had on the old one.

A few metrics to look at include:

  • Actions on page
  • Post engagement
  • Page likes
  • Page followers
  • Conversion rate
  • Mentions
  • Revenue generated

In most cases, you can access these metrics from your account dashboard for each social media network, like Facebook, Twitter, Instagram, or LinkedIn. For quick access, your team can compile this data in a Google Sheet or Excel document.

5. Use tools to track social media ROI

For an accurate social media advertising ROI, use tools made for it. Invest the time, and spend a few hours looking at the different applications for monitoring ROI. Then, determine which ones your company needs and try them out.

A few go-to tools for social media advertising ROI include:

  • Google Analytics: With Google Analytics, your team can measure the impact of your social media advertising campaigns. You can see the amount of traffic driven to your website, as well as monitor your progress on conversion-related goals, like generating a sale or lead.
  • HootSuite ROI Calculator: When you’re ready to calculate your social media advertising campaign’s ROI, use HootSuite’s social media ROI calculator. This calculator considers multiple investment factors, from ad spend to labor, plus other key
  • Facebook Pixel: For companies focusing on Facebook, Facebook Pixel is a critical tool in measuring your ROI from social media, as well as maximizing the success of your advertising campaign. Get started with Facebook Pixel by installing it on your website.

As all the above tools are free, so your team doesn’t have to worry about securing a bigger budget to use these social media ROI tools. You can make them a part of your strategy without dipping into your budget.

6. Monitor metrics that matter

Whether you’re new or familiar with social media advertising, it’s easy to focus on vanity metrics. A vanity metric is a piece of data, like page views, that looks good but doesn’t contribute to your S.M.A.R.T. goal.

For example, if your business wants to drive sales from social media advertising, you want to focus on metrics like conversion rate or cost-per-click (CPC), rather than page views. While your ad may generate clicks and views, it’s critical for those views to evolve into purchases.

That doesn’t mean you should ignore vanity metrics, however. A vanity metric can provide your team with a complete picture of your advertising campaign. Maybe, for instance, your ads generate a lot of views but not a lot of conversions.

Your team can utilize that data to reassess and improve your campaign.

As you develop, launch, and monitor your social media advertising campaign, keep your team focused on the metrics that matter. When you outline your S.M.A.R.T. goal, you can even highlight which metrics you want to prioritize.

7. Track social media advertising costs

For your social media advertising ROI, it’s critical for your team to monitor your ad costs. Even if you’ve gone ahead and created a designated ad budget, you still want to set aside the time to track your expenses when it comes to advertising on Facebook, Instagram, and other social media platforms.

As an example, maybe your business advertises on LinkedIn and Facebook. When you calculate your social media advertising ROI, however, you discover that you have a higher ROI from advertising on LinkedIn than on Facebook.

This data helps your team create a performance- and data-driven ad campaign.

In response to the performance of your campaigns on LinkedIn and Facebook, for instance, you may dedicate more of your ad budget to advertising on LinkedIn since it drives better results for your company.

If you monitor your ad spend across platforms, you can take advantage of this opportunity.

8. Publish an actionable report

A report is one of the most critical parts of social media advertising ROI. With a report, your team can demonstrate the performance and value of your ad campaign to company decision-makers. Plus, you can review and assess your strategy to discover new opportunities for improvements.

Depending on your business, you may compile reports on a monthly, quarterly, or annual basis.

For the best results, your team should create a performance report each month. Even if you don’t have to present or share this report with company decision-makers, your team can use it to monitor monthly performance, which can help you spot issues fast.

If you present or share your report to business leaders, maximize your success with these tips:

  • Keep it simple: While your team may understand every aspect of social media advertising, you need to think about your audience. If your company’s decision-makers don’t know what you’re talking about, it’s difficult for them to see why social media advertising matters. Make your report straightforward and easy to understand for any experience level.
  • Use a template: Generating a report can take time. That’s why it’s helpful to use a template, as it can save your team time and streamline your reporting efforts. Plus, a template provides business leaders with a consistent experience, which can make it easier for them to find information.
  • Discuss what matters: If your team created an S.M.A.R.T. goal, it should coordinate with your company’s short- and long-term goals. As a result, presentations on your social media advertising campaign should highlight how your strategy supports these goals. With this approach, you can secure the support of company decision-makers.

For every report your team creates, make sure it’s actionable. You want to show your department and other business leaders how you can improve the performance of your campaign and drive even better results for your company.

How can you improve your social media’s ROI?

Businesses with the best ROI from social media focus on continual improvement. That’s why, no matter your social media advertising ROI, you should always look for ways to create a stronger campaign for your company.

What are some quick ways to improve your ROI from social media advertising? Try these three tips:

Stay ahead of social media advertising trends

If your team doesn’t keep up with the latest in social media advertising, then you will fall behind. Continue to improve your social media advertising ROI by staying up-to-date with industry news. Dedicate time to reading about the latest social media network updates, ad strategies, and more.

Experiment with A/B testing

To know if one version of an ad works better than another, use A/B testing. With A/B testing on social media sites like Facebook, your team can track which ad formats, copy, visuals, and additional features provide the best results.

Draw inspiration from competitors

While you shouldn’t copy a competitor’s exact social media advertising strategy, you can look to competitors for inspiration. Look at how a competitor uses images or copy, for example, to encourage users to act. Then, customize this approach to your business.

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Want to improve your social media advertising ROI?

Dealing with a less-than-stellar social media advertising ROI? WebFX can help.

With more than 25 years of expertise, plus a client retention rate of 91%, we’re the trusted choice for businesses looking to get more from their social media. Discover how our talented team of more than 500 digital marketers can help your company improve its social media advertising ROI.

Contact us online or call us at 888-601-5359 to discuss your strategy!