Social media has created a revolution. It changed the way we communicate with each other, and opened up an entirely new way of doing business, helping to set the stage for what could be a period of unprecedented growth and prosperity.
Of course, the fact that social mediadoes this is also a product of the times. We are becoming more and more connected every day, and this fact opens us up to a whole new world of possibilities.
Perhaps unlike any other industry, social media has completely transformed marketing. It has given brands an entirely new way to communicate with existing and potential customers, and studies show that positive experiences lead to recommendations and a positive reputation.
For further proof, we only need to consider that Facebook alone influences more than half of the consumer decisions we make, demonstrating that it must be included in any strategy designed to influence consumer behavior. However, constantly changing trends make this difficult, which is one of the reasons you need to be focused on measuring social media ROI. In this article, we will explain what ROI is and how to measure it.
What is ROI? And what is its importance?
Another reason is that social media exposes brands more than ever, showing that there are risks involved in opening and maintaining a social media account. Anyone can say whatever they want about you, and you will never know how it is going to affect your image. So what is ROI? And what is its importance?
You need to be confident that every single one of your social media activities is worth the effort. In other words, you need to make sure you are achieving what you set out to achieve. This determination requires determining the return on investment, or ROI, of your marketing strategy.
Yet marketing ROI is so difficult to measure, since marketing requires layers of different communication tactics that do not always yield easy-to-see results, something executives never want to hear.
This shouldn’t deter you, because the right approach can help you get a better idea of how much your marketing efforts are paying off for the company.
What is considered a good ROI?
What can be considered a “good” or positive ROI metric will depend on several key factors, such as the investor’s ability to take on risk and their patience to wait the required time to generate a return. It is likely that investors (campaign managers in this case) who do not often take big risks in their marketing strategy and campaign management on various social networks or Google will likely receive a lower ROI because they invested less (took less risk than others).
How do you measure ROI?
Here is everything you need to know about measuring your social media marketing strategy:
1. Setting your goals
The first thing you need to do is be extremely clear about what you hope to achieve from every single aspect of your marketing strategy, which begins with identifying where your audience is in their customer journey when they come into contact with your marketing. This is important because it will help you understand what your key performance indicators (KPIs) are. For example, the first part of the customer journey is gathering information. Sometimes customers are at this stage and are not even aware of it. They are waiting for a brand that interests them to appear before their eyes. You might be running a Facebook ad aimed at such people, and in this case, your goal is simply to get a lot of eyes on your content. However, beware of setting too many goals merely around expanding the customer base. Quality is always better than quantity, and you want to ensure that each of the efforts you make has a chance to pull someone into your marketing funnel.
2. Moving forward
As a result, you will likely want something to work to support this kind of awareness. Perhaps it is another ad that is more specific, or content that you think people who saw your brand are likely to respond to. But whatever it is, you must set another, more specific goal for this tactic, for example, defining a number of clicks, shares, newsletter sign-ups, sales, etc. Every component of your marketing strategy needs to serve a purpose, and once you understand which purpose, make sure you identify the right KPIs, because these will be required to evaluate ROI. Here are some of the more common KPIs in marketing: shares, likes, comments, etc., are all good ways to measure engagement.
Sales, newsletter signups, downloads, clicks, referrals, etc., are all good metrics for conversions. Followers, subscribers, impressions, etc., are effective for analyzing unique reach.
3. Quantifying costs
Once you understand what you are measuring, you must determine how much money you are investing in a given action. However, for your determination to be accurate, you must ensure you include all the costs that led to that action. For instance, if you are measuring sales, you must include the costs of all the marketing activities that helped you generate the lead that led to the sale, which means also counting all the leads that did not end in a sale. Therefore, as in the example listed above, if you spend money on informational ads designed to expand your customer base, you must include it in the cost per acquisition. If you do not think that part of the strategy was impactful, then you should reconsider its place in your campaign. In addition, you will need to spend time calculating all the costs that went into creating and distributing the content you upload to social media. If you create content yourself, that is great, but you must take into account the hours spent creating the content you upload. This cost is added to any amount of money you invest in advertising, social media management, platform automation, etc.
4. Comparison to results
Once you get this far, calculating ROI is a simple matter of division. Take the amount you invested in each activity and divide it by the amount of profit generated from your investment. Any number lower than 1 means you are earning more than you are investing, and that is good news. Unfortunately, when your goals are not directly tied to sales, things get complicated. For example, if the goal of your campaign is to raise awareness, it can be quite a challenge to equate an increase in engagement with an increase in sales, but your job is to find a way to do so. The best thing you can do is try to find evidence that a more loyal audience helps you generate more sales. This may involve surveying your customers before and after your campaign to try and gauge their connection to your brand, although doing this meaningfully can be expensive. This is why engaging in these types of campaigns is risky, because unique engagement and reach are only good as long as they generate profits. Ensure you act based on solid research before setting out to achieve these goals. Otherwise, you could find yourself in over your head.
5. Evaluate and adapt
One of the reasons you evaluate ROI is to make sure your money is well-spent. Social media represents a risk, and it elevates the importance of maximizing all your social media efforts. But this kind of analysis is important because it also gives you an opportunity to identify areas where you can improve, an approach that will ultimately enhance the overall health of your business.
Tips for improving ROI in social media campaigns
No matter what the average ROI of social media campaigns is in the niche you operate in, you can always improve performance through active and passive actions that will help you boost campaign results and simply generate more. Follow these steps:
- Understand the audience better – One of the main factors for generating positive ROI and success in social media campaigns is understanding your audience and knowing who they are. Make sure you know who interacts with your business and on which platforms, so you can deliver precise content tailored to that audience.
- Use content wisely – It can be difficult to notice on social media what content suits each platform due to the multitude of platforms and the need to produce many types of content. It is important that you invest in content quality rather than quantity to create relevant content that will entertain, interest, or inspire your audience.
- Use lead generation campaigns – Make sure you create campaigns on social networks aimed at generating leads for your website or business. Leads are your way of bringing the audience closer to the brand and turning them from a visitor who knows the company or business into a paying customer for a product or service.
- A/B Testing and optimization – Continuously optimize your campaigns across all social networks in an effort to get better performance out of the existing budget. In addition, test headlines, copy, creative assets, and audiences to examine what works best for you.
Summary
The ROI metric in social media campaigns helps us deeply understand how much revenue we generate relative to the budget we invested in the campaign and campaign management. We measure ROI to ensure that the money we invest is well-spent and truly yields relevant performance for the business (with an emphasis on leads and conversions). We measure ROI separately on each platform according to the campaigns we run on that platform, and we will always strive to improve our campaigns’ performance to increase the final ROI.
About the author
The article was written by Taylor Jones from broadbandsearch.
Taylor is a writer, blogger, and digital marketing expert. He writes many articles and enjoys sharing his knowledge and mistakes so that others can learn from them. He believes that properly measuring budget versus results of what works for your business is the key to getting the most out of your digital marketing budget.
