A Comprehensive Business Owners Guide to Social Media ROI

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To secure executive buy-in and budget for your social marketing strategies you need to demonstrate how your efforts are contributing to the business’ goals. Social media, like other channels, has to prove its return on investment (ROI).

But beyond proving the impact on your organization, measuring and tracking ROI lets marketers dedicate more time and resources into what’s working, and improve the tactics that aren’t delivering value.

In this post i’ll give you the tools, tips, and information you need to prove and improve social media ROI.

What is social media ROI?

The definition will depend on what your organization’s objectives are—brand awareness, revenue, customer satisfaction, etc. But generally speaking, social media ROI is the sum of all social media actions that create value. After all the time, money, and resources put in—what’s the return?

If you were measuring ROI by revenue, for example, a simple formula to do that looks like this:

Profit / total investment (people hours, ad budget, etc.) X 100 = social media ROI(as a percentage)

So, if you made $1,000 in revenue from social media on a $500 investment, your profit is $500 (remember: profit = revenue – investment). And then your calculation would be: $500 profit / $500 investment X 100 = 100% return on your investment.

But that’s not a catch-all formula for proving social ROI.

Not every organization will be able to attribute revenue directly to social media. Value isn’t always measured in dollars and cents. Tethering the ROI of social media to such a narrowly defined objective prevents you from identifying the many other ways your investment in social is paying off.

If your goal is to drive brand awareness, you would measure success against metrics such as audience reach and engagement, not profit.

To account for this, in his book “Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization” author Oliver Blanchard explains that non-financial outcomes can “tell the story by capturing changes in human behavior.”

What kinds of things did your target audience do after exposure to your campaign? Did these actions align with your goals? Where did they fall short? How can they be improved for next time?

If you need another way to consider your social media ROI, think about the ratio between gain and cost, which includes things such as:

  • Labor
  • Training
  • Development
  • Social media technology
  • Agencies and consultants
  • Social media advertising budget
  • Business overhead

For estimating the gain from certain consumer actions (purchases, page views, downloads, email list signups, etc.) you need to look to analytics to determine which conversion events can be attributed to social media. This helps you define your social media ROI and prove the value to your organization.

Why measuring ROI is important

Talk is cheap, so while you could tell your stakeholders or clients about the value of social media campaigns and why they need budget and resources, nothing will convince them more than being able to show results.

Everything is taken more seriously when there are measurable and specific outcomes, and this is especially true for social media ROI.


Measuring your social media ROI is important for many reasons, including, but not limited to:

  • Changes the perception of social within your organization
  • Shows the potential impact social can have across multiple departments outside of marketing
  • Let’s you discover where your efforts and resources are being used most effectively
  • Allows you to adjust tactics in areas where efforts and resources aren’t being used effectively
  • Identifies gaps in your overall strategy, key messages, and content
  • Helps you better understand customer perceptions, preferences, conversations, and motivations

How to measure social media ROI: objectives, goals, and metrics

While it’s great to set social media goals and act on them, your job isn’t done until you’ve proven the value of your efforts.

According to the CMO Survey, social media spending increased 234 percent from 2009 to 2017, accounting for 11.7 percent of total marketing budgets. Still, only 20.3 percent of marketers say they are able to prove the impact quantitatively.

How to set social media objectives to prove ROI

Now that you know what social media ROI is and why it’s crucial for your business, it’s time to set some objectives.

The brand awareness created by social media—measured through metrics such as likes, shares, or retweets—is valuable, but not enough. According to Altimeter, only 34 percent of organizations feel that their social strategy is connected to business outcomes. To demonstrate social media’s value, you need to set social media objectives that complement existing business and departmental goals.

Your social media objectives could be based on:

  • Business conversions (such as customer acquisition or lead generation)
  • Brand awareness or perception
  • Customer experience
  • Security and risk mitigation

How to set social media goals to prove ROI

Your objectives represent what social media will help your organization achieve. Once those are established you need to set goals, which represent how and when you’re going to achieve it.

If you need some help determining goals, we recommend using the S.M.A.R.T goal framework—goals that are specific, measurable, attainable, relevant, and timely.

For example, rather than simply saying that you want to improve customer service on social media, set a numerical value and a deadline for this, such as speeding up your first response time by 10 minutes by the end of your first quarter.

If your objective is business conversions, for example, a good goal to set would be a specific number of leads you want driven by social media for the quarter. Another example of a business conversion goal would be increasing landing page conversion by 10 percent. You would measure this by tracking the conversion rate of people who land on the page through social channels.

No matter what your goals are, audit your existing social media performance to establish baseline targets, and then set appropriate goals for improvement.

How to choose social media metrics to measure ROI

Metrics represent how you’re going to measure whether you’re achieving your goals and objectives.

Social metrics such as followers, likes, comments, and shares are sometimes called “vanity” metrics, but it’s important not to dismiss them entirely.

These metrics are integral to gauging the overall health of your social presence, measuring yourself against competitors, and determining what type of content is resonating with your audience. They only become “vanity” metrics when they have no relation to your business objectives. It’s important for social data to be relevant to all stakeholders within your organization, not just social media practitioners, so avoid using these types of metrics in isolation.

Instead, use metrics that directly demonstrate how social media is helping achieve your objectives. These could include:

  • Reach
  • Audience engagement
  • Site traffic
  • Leads generated
  • Sign-ups and conversions
  • Revenue generated

When deciding what metrics to measure, ask yourself:

  1. Does it align with my objectives?
  2. Does it help me make decisions?
  3. Do I have the capacity to measure it effectively?

Social media ROI tools

Now that you know the theory behind measuring social media ROI, you’ll need the right tools to set up conversion funnels, track consumer actions, analyze data, and report the results.

Google Analytics: Track website traffic, on-site conversions, and sign-ups originating from social media campaigns.

Facebook Pixels: A piece of code that placed on your website that allows you to track conversions from Facebook ads—everything from leads to sales. You can use the pixel feature within Facebook’s own ad platform or with social ad optimization and targeting tools like AdEspresso.

UTM parameters: Add these short text codes to a URL to track important data about website visitors and traffic sources. UTM parameters work with analytics programs like Google Analytics to provide a detailed picture of your social media success, from the very high level (which networks are performing best) down to the granular details (which specific post drove the most traffic to a specific page).

How to report your social media ROI

Once you’ve set your goals and chosen your social media analytics tools, it’s time to actually track your social media ROI.

The ability to track should be built into everything you do on social media, so you’re never left scrambling to try and prove the success of a campaign.

Best practices for reporting

  • Use templates—Creating analytics templates will allow you to track your desired metrics without having to build out custom reports for each campaign. These reports will also present the data in a digestible way, allowing you to simply and effectively share your ROI on social media with higher ups in the organization.
  • Check your metrics daily—You should check your various social media metrics frequently to ensure that your goals are being met. The lifecycle of a social media campaign is often very short, so you need to stay on top of the data as it happens.
  • Stick to a timeframe—Choose a timeframe that works and stick to it. You can often have reports sent to your email inbox on specific days of the week so you don’t even have to remember to pull reports yourself.

Best practices for presenting the ROI of social media to executives

  • Speak to their objectives—If you’re trying to prove the value of social to a chief marketing officer (CMO), you need to speak to what ashe deems valuable. It’s much more compelling for her to hear: “I know your goal is to increase pipeline generation by 10 percent and here’s how social media contributes to that,” than it is to hear: “Here’s how many shares our posts on Facebook got this month.”
  • Articulate your limitations—Leadership must know what you can—and cannot—do when it comes to measuring the ROI. Demonstrate what’s possible with the data you have, but be clear about what’s not in the realm of possibility. Otherwise you’ll be set up for expectations you can never meet.
  • Use third-party insights—Data from third-party research firms, publications, and/or technology vendors provides credibility that is highly persuasive with key stakeholders. When reporting on the ROI of social, look for insights from third-party sources that can help bolster your rationale, hypotheses, and recommendations.
  • Propose a low-risk pilot program—To create a business case for further investment. That might mean expanding social into other departments, increasing your social ad spend, or investing in a platform or service. Executives teams like to invest in things with a limited timeline if there’s potential risk associated with it.

Next steps: Make adjustments

Once you’ve identified what works and what doesn’t work for your organization on social, it’s time to iterate and improve your strategy. The point of tracking your social media ROI isn’t just to prove your social campaigns are valuable, it’s to increase their value over time.

Go back and take a look at the goals of your specific campaign and evaluate how they support the organization’s overall goals.

Due to the short lifecycle of social media campaigns, a failing campaign should be changed and improved as soon as possible. Social media is never static.

To meet your social media ROI goals, you’ll need to update and adapt your strategy constantly. Take into account the analytics data you’re tracking. Think about whether your data needs adjusting after calculating your first round of social media ROI, and get back to the drawing board if necessary.

Also consider changes in customer behaviour, technology, business priorities, and key performance indicators (KPIs). The setting of business goals and calculating your social media ROI is not going to be a black and white, one-time event. It’s an always-evolving process.

Measuring social media ROI gives your organization valuable insight into the success of current and past campaigns, and what might work in the future. There’s always more to learn, more to test—and more to gain.