Measuring social media ROI is key to securing buy-in and budget for your social marketing strategy. It also 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.
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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.
What is social media ROI?
ROI stands for “return on investment.” What that means for your social media strategy depends on your organization’s objectives (brand awareness, revenue, customer satisfaction, etc.). But, generally speaking, social media ROI is the sum of all social media actions that create value. After all the time, money, and resources put in—what’s the return?
If you were measuring ROI by revenue, for example, a simple formula to do that looks like this:
Revenue / investment (people hours, ad budget, etc.) X 100 = social media ROI (as a percentage)
So, if you made $1,000 in revenue from social media on a $500 investment, your profit is $500 (remember: profit = revenue – investment). And then your calculation would be: $500 profit / $500 investment X 100 = 100% return on your investment.
But that’s not a catch-all formula for proving social ROI. Again, there isn’t one definition (here are a few more common social ROI formulas).
Not every organization will be able to attribute revenue directly to social media. Nor should they. Value isn’t always measured in dollars and cents. Tethering ROI to such a strict definition prevents you from identifying other ways an investment might be paying off.
If your goal is to drive brand awareness, you would measure success against metrics such as audience reach and engagement, not profit.
If you’re not sure what to measure, ask yourself what kinds of things your target audience did after exposure to your campaign. Did these actions align with your goals? Where did they fall short? How can they be improved for next time?
If you need another way to consider your social media ROI, think about the ratio between gain and cost, which includes things such as:
- Social media technology
- Agencies and consultants
- Social media advertising budget
- Business overhead
To calculate the value of certain actions (purchases, page views, downloads, sign ups, etc.) look to analytics to determine which ones came from social media. This helps you define your social media ROI and prove the value to your organization.
Ready to get the most out of your social media strategy? Watch our three-part webinar series and learn everything you need to know about proving and improving social ROI.
Why you need to prove ROI
Talk is cheap. Sure, you could tell your stakeholders or clients about the value of social and why they must invest in it—but nothing will convince them more than data.
When there are measurable and specific outcomes, people take notice.
- Can change the perception of social within your organization
- Shows the potential impact social can have across the business (not just marketing)
- Shows you where your efforts and resources are being used most effectively
- …And when they’re being wasted, so you can shift tactics as needed
- Helps you better understand your audience (what they care about, what they respond to, etc.)
How to measure social media ROI
While it’s great to set social media goals and act on them, your job isn’t done until you’ve proven the value of your efforts.
Social media spending in the United States alone is expected to hit $17.34 billion in 2019. Still, only a fraction of marketers say they are able to prove its value.
To do it yourself, you need to follow three simple steps.
Step 1: Have clear objectives
Brand awareness created by social media (shares, likes, followers etc.) is valuable, but not always enough.
According to Altimeter, only 34 percent of organizations feel that their social strategy is connected to business outcomes. To show value, you need to set social media objectives that are aligned with business and departmental goals.
Your social media objectives could be based on:
- Business conversions (such as customer acquisition or lead generation)
- Brand awareness or perception
- Customer experience
- Security and risk mitigation
Step 2: Set smart goals
Your objectives represent what social media will help your organization achieve. Once those are established you need to set goals, which represent how and when you’re going to achieve it.
Here are a few simple examples:
If you need help setting goals, we recommend using the S.M.A.R.T. framework. Here, each goal must be specific, measurable, attainable, relevant, and timely.
For example, rather than saying that 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.
Another example of a business conversion goal would be increasing landing page conversions by 10 percent. You would measure this by tracking the conversion rate of people who land on the page from social channels.
Whatever the goal, be sure to measure past performance to establish benchmarks. And then set targets for improvement.
For more on this, check out our step-by-step guide to setting smart goals.
Step 3: Track the right performance metrics
You need 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 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:
- Does it 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?
For more on this, check out our definitive guide to choosing the right social media metrics.
Step 4: Know how much you’re spending on social media
You need to be clear about the scope of your investment in social media if you hope to determine whether you’re getting a good return. There are four key things you need to measure you return against.
Cost of tools and platforms
Most networks are free to use, but do you pay for a premium version of a social media management platform? If you’re measuring the ROI of a campaign that only lasts half a month, for example, you’ll need to take the monthly cost of the tool and divide it by two when doing your calculations.
Budget allocated to social ad spends
This is the easiest thing to track as the cost of each boosted Facebook post or Instagram carousel ad will be 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 create blog posts? How much does the writer make an hour? How many hours did it take to produce that blog post? Make sure you also account for any meetings—or portions of meetings—that went into the ideation and creation of the content.
Time spent by employees responsible for social media
How much time does your team spend on social media? From meetings, to creating 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.
Once you’ve added up all the above, you can measure it against the goals and metrics you committed to in steps two and three.
“Profit” (in this case website visits via social) / total investment (people hours, ad budget, etc.) X 100 = ROI (as a percentage)
Social media ROI tools
Now that you know the theory behind measuring social ROI, you’ll need the right tools to actually do it.
Social ROI calculator: This free tool makes it easy for you to calculate the return on your social media investment.
Google Analytics: Track website traffic, conversions, and sign-ups from social media campaigns.
Hootsuite Impact: Measure the ROI of social media 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.
Facebook Pixel: A piece of code for your website that allows you to track conversions from Facebook ads—everything from leads to 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.
UTM parameters: Add these short text codes to a URL to track important data about website visitors and traffic sources. UTM parameters work with analytics programs like Google Analytics. They 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).
Need more info? Check out our tutorial on using UTM parameters.
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.
Hootsuite Insights: Will help you identify conversations and trends within your industry, reach, brand sentiment, and more. It’s all backed by 100 million data sources, real-time results, and an easy-to-use interface.
How to report the ROI of social media
Once you’ve set your goals and chosen your tools, it’s time to actually track and report results.
Best practices for reporting
- Use templates. Creating analytics templates will allow you to track metrics without having to build out custom reports for each campaign. With easy-to-understand reports, you’ll be able to clearly demonstrate the value of social to the higher ups in your organization.
- Use plain language. Not everyone understands social media data as well as you. So, it’s important to present information as clearly as possible. Hootsuite Impact turns data into straightforward insights that will help your entire organization understand the value of social.
- Check your metrics daily. So you will know if a tactic isn’t working before the campaign or tracking period ends. If you need to, you’ll have time to make adjustments and shift resources and budgets.
- Stick to a timeframe. You can have reports sent to your email inbox on specific days of the week so you don’t have to remember to pull them yourself.
Best practices for presenting social media data
- Speak to business objectives. If you’re trying to prove the value of social to a chief marketing officer (CMO), for example, you need to speak to what she deems valuable. It’s much more compelling for her to hear: “I know your 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.”
- Articulate limitations. The rest of your business must know 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. You can measure how many impressions an ad received, but you won’t know if any of those people checked out your website afterward (unless they clicked on the ad itself). Don’t set expectations you can’t meet.
- Use third-party insights. Data from third-party research firms, publications, and/or technology vendors can improve credibility with stakeholders. When reporting on the ROI of social, look for insights from sources that can help bolster your rationale, hypotheses, and recommendations.
- Propose a low-risk pilot program. Make a business case for further investment. This might mean expanding social into other departments, increasing your ad budget, or investing in a new platform or service. Senior 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).
3 ways to improve ROI
Measuring the ROI of social is about justifying past actions. But again, it should also be used to 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. Run similar ads but change up the copy or visuals you’re using. There are countless things you can tweak to see which deliver the best results.
Check out our guide to A/B testing for more on this.
2. Use data to test hypotheses
For example, you may notice that tweets featuring more than one product photo get more conversions. Or that giveaways outperform your “how-to” content. A hypothesis will ensure you’re gathering data with intent. This makes analysis faster and more structured.
The next step is setting up measurement capabilities to prove whether your hypothesis is correct. This could include adding UTM parameters to social media content or creating a conversion funnel in Google Analytics.
Social media is always changing. The content, strategies, and channels that you use to connect with your audience today might not be effective tomorrow.
To meet your goals, you’ll need to update and adapt your strategy as time goes on.
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.
Measuring social media ROI gives your organization valuable insight into the success of current and past campaigns, and what might work in the future. But there’s always more to learn, more to test, and more to gain.
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.
With files from Evan LePage.