You need the ability to measure the return on investment from your social media efforts if you’re a digital or social media marketer (Return on Investment). It reveals the monetary worth of your social media campaigns in various currencies, allowing you to invest more heavily in successful strategies while cutting back on wasteful ones.

The rise of shoppable posts and social commerce highlights the growing importance of social media as a key component of any successful marketing strategy for increasing brand awareness and return on investment.

Just what is the return on investment for social media?

It is important to first establish what return on investment in social media actually means. ROI is the value of your social media efforts, expressed as a percentage, divided by the time and energy put into them.

Return on investment can be calculated using the following formula for social media:

Your social media marketing efforts are profitable if their return on investment is greater than 0. If it drops below that, you’ll start losing money.

How do you measure the value of your social media efforts?

The metrics used and the goals of the organisation should both be considered when determining ROI. Download our social media campaign ROI calculator to keep tabs on your objectives, spending, and returns.

Is your social media strategy focused on brand awareness, lead generation, or closing deals? The success of your efforts to demonstrate value can be measured by the metrics you establish, so keep that in mind as you work.
Common indicators of social media’s return on investment are:

  • One of the most common and valuable metrics is engagement, which reveals how much interest there is in your content and brand on social media. Based on the findings of an Altimeter study, more than a third of content executives use engagement as a performance metric. Metrics of engagement can include the number of times a piece of content is viewed, shared, liked, or even just mentioned.
  • Audience size refers to the number of people who see your social media posts and engage with them. It takes into account the number of people who saw your social media post as well as how far it was shared. It’s important to keep tabs on, but measuring how many people actually saw your post can be trickier than measuring engagement.

Return on investment (ROI) for social media: how do you measure it?

Set up a method for measuring return on investment once you’ve decided on a social media goal or goals.

This can be accomplished with minimal effort by creating a target in Google Analytics. Goals and event tracking can help you achieve this. To learn more about the process and what you need to do, check out our Google Analytics Goals Guide.
Use a service like Buffer or Ahrefs to monitor your likes, shares, and brand mentions, among other metrics.
Check out this video for a comprehensive introduction to Google Analytics, perfect for those who are just getting started.

In order to generate leads through social media, you must first identify the channels that produce leads and the types of content that attract potential customers. Knowing the total number of leads is helpful for demonstrating campaign performance and generating a return on investment.
It’s important to know how well your social media content and posts convert after you put in the time and energy to create them. Including UTM parameters in the links makes it possible to monitor engagement by channel and advertising effort.

In what ways can monetary values be assigned to metrics like ROI?

Your social media return on investment (ROI) can then be determined by assigning monetary values to the outcomes. Using past information is the most effective method for this. This will allow you to estimate a customer’s LV over time. Assuming an LV of $100, 10% of people who see your content will buy something from you. So, if you can convince a visitor to become a customer, you will earn $10 (as $100 is worth ten dollars).

How do you determine the return on your investment in social media?

You need to know how much you spend on social media campaign development and execution in order to determine your return on investment. Expenditure examples could be something like:

It takes time and effort to set up campaigns, so factor in the time you or your marketing team spends on social media.

Track the costs of any recurring tool or software subscriptions

Take into account your weekly or monthly social media advertising budget if you run paid campaigns.
Budget for content creation – Don’t forget to include the cost of content creation when talking about social media.
Do you hire a copywriter or video content creator from a third-party firm? Take into account the cost of your investment.

Advice on how to maximise your social media’s return on investment

There is always room for improvement in social media return on investment, no matter what your current average may be.

Focus on learning about your target demographic so you can better reach them through social media. Be aware of who is engaging with you and where to create more interesting content for them. Utilize this buyer persona template to quickly and easily develop buyer personas if you haven’t already.
Get creative with your content; there’s a lot of competition for attention on social media. It’s not about how much content you have, but rather how useful, interesting, and entertaining it is.
Use social media for lead generation: 15 percent of U.S. marketers’ budgets are allotted to social media, according to Statista. At this price point, you need the help of social media to bring in new clients.
Iterate and improve – Improve the performance of your organic social media posts by swapping out the accompanying images, keywords, and post titles. Experiment with different ad formats and target demographics on paid media to find what works best.