No matter what business you are operating in, getting quantitative returns is a must. In normal business operations, you can easily evaluate sales and costs to derive profits. But is it possible to calculate return on investment (ROI) when it comes to social media marketing?

Well, the answer is yes! Today, social media is the leading platform for marketing. Companies and brands invest hours and huge amounts to attract their target audience. Despite these efforts, very few are able to derive value from the social data. To make informed decisions, you must evaluate if you are actually earning the expected returns. To do so, you first need to understand what social media ROI means and how to calculate it.

Social media ROI refers to the returns you get from your social media activities. It is measured using the formula: Value (or Profit) / investment X 100 = ROI (as a percentage). The application of this formula may seem doable, but in reality, it is quite tricky. In fact, most social marketers have expressed that they are unable to measure the ROI of social media marketing. 

 To derive reliable results using this formula, you need to follow the following steps:

#1: Identify the goals you seek to achieve through social media marketing:

You must plan out the exact goals you want to achieve through social media. Some of them may be:

• Earn more followers

• Drive traffic to your website

• Create brand awareness,

• Expand reach

• Increase community engagement

• Generate leads, etc.

While laying this out, ensure that your social media goals align with your business objectives. Additionally, they must create value, be realistic, measurable, and attainable.

#2: Track social media performance metrics:

Most social media sites have built-in analytical tools that provide social marketers with numerous indicators that impact their performance. For instance, Instagram Insights presents interesting data into the ways people interact with your Instagram profile. Similarly, Facebook also offers tools like Facebook Insights and Facebook Ads Manager to evaluate performance. Essentially, the important metrics that you should focus on are the reach, traffic, engagement, revenue, and leads generated. Keep in mind your goals while tracking the metrics and prioritize them accordingly. Remember that these metrics provide data only. Proper analysis and assessment of the same is essential for better decision-making.

#3: Calculate your social media expenses:

To evaluate whether social media marketing is giving you positive returns or not, you need to know how much are you spending on your social media campaigns. This investment not only includes monetary expenses such as the amount spent on ads, and salaries, but also your valuable time. Once you know how much social media marketing costs you, ROI can be calculated easily using the formula mentioned earlier.

Overall, the process of finding out social media ROI requires good analytical skills, a clear vision, and a proper understanding of social data. At a time when there are many social media sites with different performance indicators and tools, evaluating ROI can be confusing and time-consuming.

If you are also struggling with finding your social media ROI, get in touch with us and benefit from our expert services today!