44% of Companies Don't Know How to Measure Social Media ROI (Here's How)

Marketing Insights for Professionals

Marketing Insights for ProfessionalsThe latest thought leadership for Marketing pros

Monday, August 19, 2019

A significant proportion of businesses are failing to determine the correct ROI of their social media marketing. Here we show you how.

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Understanding your return on investment (ROI) from marketing is important, as businesses which spend more than they receive in benefits from these activities could be placing themselves at a disadvantage.

As a result, the fact that 44% of companies don’t know how to measure their social media ROI spending is both surprising and worrying. It points to a clear lack of transparency that could hinder future marketing efforts, as well as a poor understanding of the reasoning behind this activity in the first place.

Monetizing the true value of social media marketing can be difficult, as how do you attribute a financial value to a 'like' or social media share? However, there are ways to do this, so fear not, for help is at hand. Here we outline some of the simple measures you can put in place to make ROI from social media marketing much easier to determine:

1. Consider cost of investment

Determining ROI means weighing up costs against realistic benefits. It means you need to have a clear understanding of the amount of resources, time and effort that will be needed to craft your social media campaigns, as well as the overarching aim of doing so.

To calculate the true costs involved in social media promotion, you must include all aspects of production. Things to consider include the cost of tools and platforms used to promote content, internal costs in terms of resource for content production/promotion, as well as any budget allocated to ad spending.

Once calculated, these costs must be weighed against the overall aim of the campaign, which could include anything from increasing the number of customers entering your sales funnel, through to selling specific products or raising brand awareness. What’s important is that a monetary figure should be worked out and associated to these gains.

2. Set clear goals and KPIs

From the outset of any campaign, it's important to understand what you’re trying to achieve; this enables you to know whether your efforts have been successful or not. This means the creation of clear goals from the start, as well as setting up key performance indicators (KPIs) that will enable tracking of progress once a campaign is launched.

You need to be SMART when it comes to goal-setting, so use this acronym to remind yourself that all the goals you create for your projects should be Specific, Measurable, Achievable, Relevant and Timely. An example might be, you want to achieve four sales conversions within the next two months that can be directly traced back to engagement generated through social media engagement on Facebook.

You can use a number of tools to track whether or not your social media efforts are having the desired result. These include the use of Google Analytics (GA) to track page views or social referrals from specific posts.

3. Track the correct metrics

Once a campaign is live, it's important to remember to track its progress in order to provide clear updates and make any tweaks that could potentially boost your ROI as it evolves. But to do this, you need to be aware of the right metrics to consider.

Metrics including 'likes' and 'shares' can be a positive way to track the overall health of a social campaign, but when it comes to demonstrating ROI, these become almost intangible values. Instead, you should focus on attributing clear links between your social media activities and financial gains.

GA reporting can play a crucial role here, especially as the Conversions tab in the reports section can provide information around each conversion's value in dollars. This can be crucial data to compare to your original cost analysis to determine whether your campaigns are proving profitable overall.

4. Maximize returns with optimized content

Ultimately, you want to ensure the content you’re pushing out across your social channels is optimized correctly to deliver the best return in terms of engagement and conversion, as this will directly impact ROI.

In order to effectively tailor your content to deliver maximum impact, you first need to understand your target audience and this means investing in activities like persona research or customer polling. Find out what attracts people to your brand and who your ideal customer is. It's then important to tailor your social media campaigns to reflect these findings.

Finally, don't be afraid to tweak your campaigns as you go. If, for example, you see high levels of engagement with a video you've created and posted to social, this could show a strong appetite for this type of content and so it's something to consider repeating in future. At the other end of the spectrum, if you see your posts aren’t driving traffic that creates a positive ROI, you should consider shaking things up and implementing a new approach.

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