May 21, 2019

Why ROI Is the Ultimate Measure of Your Social Media Marketing Success?

When it comes to social media marketing, the key to building solid relationships and expanding your reach is increasing social media engagement and hiring the right person/company for the job. However, this poses another important question: how do you measure the success of your social media marketing? You measure it with ROI.

So, why is ROI the ultimate measure for determining the success of a social media campaign? This can be a tricky question to answer but I’ll do my best to provide you with a solid justification for measuring the ROI of your social campaigns.

Why Measuring Social Media ROI Is Crucial for Your Business

A key part of any digital marketing effort, social media marketing deserves to be allotted a larger business budget than it’s currently being allocated. At the same time, it is important that you don’t keep using a social media strategy blindly. Measure a social media campaign’s return on investment (ROI) before deciding to continue with it or ditch it.

Today, companies across the globe, including those in the United States, are increasing their investments in social media, as they hope to turn it into a major revenue driver. But, this is also increasing the pressure on social media managers and others in charge of social media campaigns. They now have to prove that the social media budget is being utilized effectively and is producing the desired results. This has made measuring social media ROI crucial.

So, what is social media ROI? There are many misconceptions about how it is calculated, making it difficult to understand what social media ROI exactly is. You may find social media ROI difficult to understand but it does not have to be that way. Here, we provide all the details about what’s included in social media ROI and how you can calculate it for your business.

Understand What’s Included in Social Media ROI

Contrary to popular belief, calculating social media ROI is relatively easy. Following is how I would calculate the social media ROI:

Profit/Investment ×100= Social media ROI %

Here, profit is the money you’ve earned from your social media marketing efforts, while investment is the total cost of your social media marketing efforts. An example of investment would be the money you invested in an Facebook ad campaign to achieve a specific goal.

The above calculation of social media ROI is a good way to start. However, it is important to know that calculation of social media ROI becomes a little more complicated when your business objectives are brought into the equation. For instance, if increasing brand awareness is your reason for doing social media marketing then you will have to calculate your ROI using related measures i.e. page likes, followers, mentions etc.

Let’s say that a Facebook campaign for raising brand awareness helped you to gain a hundred new fans. At first, you may find it difficult to estimate the monetary value of new fans. But, once you start to analyze the fans as they move along the customer journey, you will know exactly how many fans became a paying customer.

Is It Necessary to Measure Social Media ROI?

This is a question I get asked a lot. There are many people who question ROI being the right measure of success for social media. They argue that a financial return doesn’t show the true value of a social media campaign for the organization. While it is true that ROI doesn’t provide you with the complete picture and you need to measure a few other variables to determine the success of your social media marketing, the fact of the matter remains that business owners and C-level executives live for ROI.

For them, ROI has been the ultimate measure of success since the very beginning of their careers. You can tell them that your social media ROI doesn’t paint the complete picture, but they’re not going to believe you until you prove it to them. For this reason, it is crucial that you get serious about ROI. At the same time, make sure this doesn’t happen at the expense of other metrics. Just ensure the right balance and you’ll find yourself on the right track.

Why You Need to Track ROI of Your Social Media Marketing

Truth be told, all marketing campaigns—regardless of their shape and size, rely on trial and error to some extent. Even if you’ve researched the market thoroughly, your marketing campaigns may not always perform like you want them to and this makes it crucial to track ROI. Without understanding how much revenue an investment generates, you’ll never know if you’re spending too much or too little money.

Since every business needs to remain financially stable, it’s crucial to fine-tune marketing budgets to over under or over -spending. By accurately tracking your ROI and determining there’s room for growth, you will make it easy for yourself to justify a budget increase. The more money you have for your marketing efforts, the easier it will be for you to do your job.

As the social media marketing environment becomes increasingly competitive, there is increased pressure on companies and marketers to invest more and more money into their campaigns in order to stand out. However, increasing social media marketing budget can only be justified if campaigns are delivering tangible results and how do you find this out? By measuring social media ROI.

As you can show that your investments are benefiting the company, analyzing your social media revenue helps you to support budget requests. On the other hand, if your ROI is too low, you can pinpoint the inefficiencies of your social media strategy and start making improvements. Either way, measuring ROI helps the growth of your marketing campaigns and your company.

In addition to the above, measuring the ROI of your social media marketing can help you determine the value you’re delivering to your audience. An evidence of your messaging being relevant and compelling is a high number of converting users. This proves that quality content is crucial for earning social media revenue.

For more information on how to measure your social media marketing ROI, get in touch with us today!

by Bobby J Davidson

I love our companies  and we love what we do.  For more information on the Davidson Family of Companies, visit  Sign up for my Newsletter at the bottom of this page.