The return on investment (ROI) in social media marketing is something every company strives for. Therefore, businesses are making consistent attempts to attract more customers via social media.

Advertising on social media sites like Facebook and Instagram reaches more people but costs money. Ads that you pay for may be quite particular in their targeting, allowing you to reach a very narrow audience anywhere in the globe. But will your social media marketing budget bring in as much money as you put into it? This is an important question that requires a response.

Here, the idea of return on investment (ROI) comes into play, a statistic that is commonplace across many different fields. Key performance indicators (KPIs) are important metrics for both you and your team to track as your business expands and matures. The fact is, however, that 34% of worldwide marketers are clueless when it comes to figuring out their return on investment (ROI) from social media. Without further ado, let’s examine what a social media return-on-investment calculator is and how it works.

ROI in social media

To put it another way, return on investment (ROI) in social media marketing measures how profitable your marketing activities are relative to the time, money, and effort you put into them. To rephrase, it illustrates how much a project will cost compared to how much it will make.

Depending on your objectives, return on investment in social media marketing may be stated either quantitatively or as a percentage. Typically, a social media ROI calculator will provide a percentage result after you enter your earnings and subtract your expenditures.

The Value of Social Media – How to Measure It?

There are two options for gathering the data needed to calculate the return on investment from social media. To start, there’s the medium of social media itself. Instagram, LinkedIn, and Facebook all include analytics tools tailored to business and premium accounts that may help you track things like the demographics of your followers, the frequency with which your page is visited, and more.

Second, you may use external social media analytics tools to learn more. In order to calculate the return on investment (ROI) of your social media channels, these tools will expose you to new metrics, such as session duration, pages per session, bounce rates, etc.

To what end, therefore, should you track and report your social media’s return on investment?

  • Examine how successful and lucrative your social media initiatives are.
  • Determine what aspects of your social media advertising have been most effective.
  • Expand the scope and intensity of your social media efforts.
  • Plan for the future and adjust your spending on social media.

What KPIs Should You Use for Social Media?

To be successful in the competitive world of lead generation tactics, continuous performance assessment is a must. The success of your social media campaign at influencing potential consumers depends on your familiarity with a number of key measures that may be used to determine your return on investment.

These are the five most important indicators for your social media accounts that you should monitor regularly.

Influence: the total number of individuals who have seen your social media posts. Having a large audience base tends to result in a higher return on investment. Traffic consists of the total number of clicks made by potential customers across all media.

The term “lead” refers to any action taken by a customer prospector that results in a potential sale being pursued. Anything from a username and password to an email address is fair game. For a consumer that contributes beyond simple traffic but who hasn’t been fully won over, this is an extra step.
Clients: Prospects who make a financial commitment.

What is meant by the term “conversion rate?” It refers to the proportion of leads that are converted into paying customers.

Return on Investment (ROI) in Social Media and How to Determine It

Social media marketing return on investment may be easily calculated after data is collected and indicators are established. On the other hand, there are limited options for you to perform the necessary computations. The formulae’ constituent parts will vary depending on the variables of interest. You can easily calculate your return on investment (in percentage terms) if you know how much money you made specifically from your social media marketing efforts.

If attributing the effect on sales is challenging, however, ROI can be determined using other metrics. Here are the measures to take for precise calculations.

Establish Your Objectives

Knowing your end goal can help you determine the sort of return on investment that will bring you there. Perhaps the primary goal of your social media strategy is to increase your number of followers, which will in turn increase your brand’s worth. How many of your clients are interested in knowing:

  • Just follow the links, would ya?
  • Invest in something now.
  • Follow, subscribe, like, and share
  • Receive data by downloading
  • Make sure you fill out the necessary paperwork.
  • Put some effort on your page.

Monitor Results

Once you’ve settled on a subset of conversion objectives to monitor, you may begin doing so. Many social networking sites also include trackers that sift through data and display findings.

Give Each Conversion a Dollar Amount

The moment has come to express all values in terms of dollars. From here, you may either make educated guesses or use past facts to guide your planning. Some typical approaches to assigning a monetary value to your transformations are shown below.

LTV refers to the average profit you make from a single client throughout their whole lifetime. Suppose you have found that 20% of the people who follow your social media page wind up buying anything from you.

The worth of an additional follower may be estimated as $20 if you know that the typical customer spends $100. This is calculated by multiplying the average customer’s total expenditure by 20%, or $20.

If you don’t have access to relevant historical data, you can make educated estimates based on your knowledge and expertise.

Pay-per-click (PPC) expenses are the sum of money required to run advertisements in order to obtain the same results on social media. So, you’re contrasting your free traffic with the cost of buying it.

If it costs $0.25 to obtain one new Instagram follower, then gaining 100 followers organically may be worth $25.

Find Out How Much You’ve Spent on Social Media Ads

This is something that the accounting team can assist you with. Add up how much money has been spent on social media advertising. Examples of this may be:

  1. Costs associated with a premium membership
  2. Spending on social media advertisement
  3. Social media marketing expenses may include: Team salaries, social media management, content development, consultancy fees (if any), etc.

Provide a Channel-by-Channel Breakdown of Revenue and Expenses

One can determine the return on investment (ROI) for each social media platform in order to do comparative analysis and determine which ones produce the greatest results. To do this, you must break down the expenses and income from each source and use the same method to calculate individual returns.

If all you care about is the return on investment for your social media marketing campaign, you may skip this. Anyhow, you can do the math for each platform separately and then add them all up to obtain the whole one.

In a recent survey, HubSpot polled 1,500 marketers on their favourite social media platform based on return on investment. Nearly half of the businesses in the study cited Facebook as the social network with the best return on investment. Instagram is rapidly growing and gaining popularity as well.


Although social media can sow a lot of seeds, it may not always be easy to harvest those seeds. There’s no guarantee that the seeds you sowed will bear fruit.

The return on investment (ROI) from your social media initiatives should be consistently calculated. Incredibly, for a formula with its origins in elementary school mathematics, it contains a wealth of useful information for your further development and improvement.

Use a programme like SocialPilot, which not only automates the scheduling of your posts but also evaluates their success, to make waves in your social media marketing efforts.