Social media marketing is a given for the vast majority of companies active online. But how are results measured and how is campaign success quantified in terms of ROI?
There is a popular misconception that social media is “free”, because of the lack of cost to sign up for the various platforms out there. But the truth is, a lot of time and effort go into creating a strategy, writing & designing posts, implementing campaigns and so on.
This is where social media ROI comes along, i.e. how much monetary return you get from all the resources you spend on social media.
According to a CMO survey, only 2.3% of companies questioned actually invested marketing dollars in measuring their social media ROI. And while they may be struggling to accurately assess ROI, the tendency continues to be investing more in social media…
So let’s make thing simpler and go through 10 social media ROI tips that will help you measure success:
1. Define specific social media goals
Before you move forward with a social campaign, a necessary step is to define a set of specific goals you want to achieve. It helps if you keep your overall business objectives in mind and align them with your social media activity.
It helps if your goals are measurable, such as:
- Email signups
- Form submissions
- Website traffic
- Number of followers
2. Assign a value to your goal
Moving on, you will want to give your goal or conversion a value. For example, how much is each email signup worth to you?
There are a number of different methods to calculate the value of your goals, but the most used ones are:
This is the average value of your customers purchases
Lifetime value x conversion rate
Simply multiply your customer lifetime value by your average conversion rate.
3. Always track your campaigns
Tracking all your social campaigns is imperative to successfully calculate your ROI. With the vast number of online tools available, this shouldn’t be a problem.
Let’s take Facebook for example. Apart from the metrics available through the social media platform, such as reach, clicks, shares, likes etc, it is recommended that you also use the conversion tracking pixel so you can accurately view the number of conversions occurring.
In addition, it helps if you also tag your campaign with UTM parameters so you can get more insights through your Google Analytics account.
This way, apart from the goals you are tracking with the pixels you can view other important KPIs, such as page-views or other conversions, and you can also keep track of which social traffic comes from paid campaigns, page updates or personal profiles.
4. Calculate all your costs
Next step is to put down all your expenses for the given social media campaign. Apart from the direct cost for promoting posts and paid campaigns, what other indirect costs are there? ?
Here is what you should be adding up:
- Advertising budget
- Paid labor – Is someone getting paid to manage your social media?
- Design costs – Did you buy some graphics or hire someone to make some designs?
- Tool costs – Are you using paid tools to help you manage and track your social media?
5. A/B testing is a must
As with all other online marketing activities, social media activities perform best when you try out different types of posts and campaigns.
I cannot stress enough the importance of A/B testing for maximizing ROI and investing money where the results are worth the efforts.
For example, you can test:
- posting times
- or which social media platform brings more conversions
6. Stop fixating on vanity metrics
Another tip for better social media ROI is to resist the temptation of the vanity metrics. Sure, everyone likes seeing hundreds of followers, likes, shares and retweets, but are these metrics indicative of you achieving your goals?
Measure what matters and don’t overstress over meaningless numbers if they are not directly related to generating actual revenue.
7. Pay for reach not for followers
An important tip many brands don’t follow on social media is to pay only for increased reach, not for followers.
Having a bloated number of social media fans doesn’t necessarily reflect the number of your true, loyal followers. So why pay for wasted likes, friends and followers if they only end up ignoring your content afterwards?
After all, organic reach keeps becoming harder and harder, so you should be paying to reach an audience that actually cares about your brand. The important thing here is to define the right audience.
8. Take other channels into account
Apart from the specific goals you are tracking for your individual social media campaigns, you want to take into account how your social efforts affect the performance on other channels.
For example, your social media activities may not directly result in more sales, but they may drive more organic or direct traffic that end up converting.
So, what you can do is take into account the number of assisted conversions that social media plays a role in and ensure they grow over time.
9. Don’t forget about long-term values
The long-term effect social media can have on creating an engaged customer that is more likely to advocate your company and buy from you, is not something you can gauge from the results of individual posts or campaigns.
Moreover, you can’t put a number on how “likeable” your brand is, how engaged users are or how you are gradually building relationships with your audience.
Over time, if your social media is paying off, you should see a gradual increase in your shared content both through your website as well as on your social platforms. In addition, your brand mentions and online reputation should be increasing if your social media activities have an impact.
10. Analyse results
So now that you’ve tagged, tracked, tested and measured everything that matters, here comes the moment of truth.
What is your actual Return On Investment from social media?
Let’s create a fictional example to make more sense:
Let’s say you have a social media campaign on Facebook and Twitter with a goal of gathering more email signups.
You have calculated your customer lifetime value to be worth £100 and and from the people who sign up for your email list about 0.5% end up buying.
That makes the value of every new email sign-up about £0.50.
If you gained 1,200 new email signups through your social media campaigns that gives you a total value of 1,200x£0.50=£600
Then you want to add up the total social media expenses. Let’s say they add up to £350 for both FB and Twitter.
That gives you a social media ROI of (£600-£350)/£350 *100= 71.43%
All marketing should be performance-based and social media shouldn’t escape this trend.
Whatever the size of your business and the social media strategy you follow, accurately measuring ROI is a key part of evaluating your campaign’s success and optimizing activities.
So plan your next social campaign with our ROI tracking tips firmly in place and let us know how it went 🙂
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