There is no one way to measure social media ROI unlike more traditional marketing methods. But instead there are a range of different metrics you can employ to gain an understanding of your social media performance. With 55% of potential customers using social media at some point during the purchasing funnel, measuring the success of your marketing activities is more important than ever. Here’s how to get started.
What is Social Media ROI?
The ROI on your social media activity is the figure you get once you establish how much you’ve spent and compare it against the money your business has received as a direct result of this activity. In this article we’ll look at different objectives to help you effectively measure ROI.
Why is it important to measure Social Media ROI?
If you’re going to use social media for your business, it’s extremely important to measure how it performs for a number of reasons:
Providing statistics to business stakeholders who are less technically savvy or don’t see the merit of social media will help to clarify why it is a valuable marketing tool.
Marketers can see what works and what doesn’t and change strategies accordingly.
To help gain a wider picture of your customers – how do they communicate online and what do they engage with?
Identify Social KPIs
Before you start, make sure you have your KPIs in order. What would you like to gain? Are you looking purely to increase revenue, or are your social media campaigns in place to increase brand awareness? You may be looking to utilise social media as a cheaper way to manage customer service and complaints, to increase your average order value or to improve customer retention. Common KPIs include:
Traffic from social media to your website
Engagement (where engagement rate is expressed as a percentage calculated by the number of people who interact with a post, divided by the number of people who saw it)
Channel growth (which is more sustainable than setting a goal to achieve a certain number of likes or follows)
Brand mentions and interactions
Know how much you’re spending
Next, you’ll need to identify your investment in social media, which isn’t always as straightforward as it is when measuring ROI for other channels. There is no cost attached to having a Facebook or Twitter profile, but expenses may come from other related activities.
Here are some things you may spend budget on:
Measuring Social Media ROI from Paid Activity
To really reap the benefits of social media you need to be investing in paid advertisements. Algorithmic changes on Facebook means less than 2% of users who ‘like’ your Facebook page see your content, and the social giant is experimenting with a new news feed that means only paid content from brands is visible at all. In a similar vein, Instagram’s controversial algorithm change means you’ll only see ‘the content you care about most’.
We recommend using the ROAS metric (Return on Ad Spend) to measure your paid social efforts. ROAS is calculated simply as conversion value divided by spend. You can assign conversion values to individual products in Facebook and it will calculate the conversion value direct from your ads.
You should also use the correct ad types to achieve your goal. Many brands click the ‘boost post’ button in the hope of generating sales, but post boosts are designed for engagement. You can run Facebook campaigns under the following objectives instead:
Remember Facebook’s attribution model assigns conversions based on the last interaction users had with your content, whereas Google Analytics assigns conversions based on the first interaction users had with your content.
Facebook default conversion tracking
28-day click through
Conversions are attributed to the most recent ad someone clicked or viewed
Any events outside the maximum conversion window (28 days) are not counted
If someone clicked on an ad from Facebook then converted on the website three days later this conversion would be counted as a conversion in Facebook Ads Manager
Google Analytics conversion tracking
Only reports conversions that resulted from a direct referral
Reports conversions that happened in a straight line, i.e. someone clicks on a Facebook ad and immediately converts there and then
Measuring ROI through Dark Social
Less ominous than it sounds, Dark Social refers to social shares that occur on private platforms such as email and Whatsapp. Dark Social actually accounts for 84% of social shares according to data from RadiumOne.
You can measure Dark Social in the following ways:
Platforms such as Bit.ly allow you to track the number of clicks to shortened links.
Insert share buttons on your website and track clicks using Google Analytics
Maximising ROI through Rich Data
You can maximise the ROI of social media advertising based on customer on-site behaviour and channel engagement. By placing your ad on social channels at the right point of the customer journey you can automatically influence their decision. Find out more about data-led social media services.