Social media is a potent branding, lead generation, and awareness tool. But for a business, you want everything you do to contribute to your bottom line. Surprisingly, only about 38% of marketers know how to track their ROI on social media to prove their strategies are working.
Which leaves me wondering, why would you spend tens of hours creating social media posts, boosting posts, engaging your audience, and still not know how what it all translates to for your bottom line?
For most people, social media is about engagement, likes, shares, and follows. Getting all these “vanity metrics” takes time and sometimes money. But only a fraction of businesses with a social media presence are able to track and determine the ROI they get from social media.
Part of the reason for this is that tracking social media ROI is easier said than done. And the reason for this perspective is that most brands measure the wrong metrics – likes, shares, comments, etc.
While they are great to have and reveal how relevant you are to your audience, you can’t monetize likes, shares, and comments.
What you can measure is the traffic that goes to your website, resource downloads, inquiries, and other goal-oriented actions that come from your social media campaigns. This only goes to show that measuring social media return on investment is actually possible.
Why You Should Measure Your ROI on Social Media
Tracking and measuring your return on investments helps you determine whether your marketing efforts are bearing fruit. It shows you what’s working and what’s not and helps you strategize better and position your business for success.
Nevertheless, for you to measure your ROI effectively, it’s crucial that you keep up with changes in social media algorithms and new tools. At least that’s what we do on behalf of our clients at Modern Day Pro. We don’t just create campaigns; we work with you to ensure those campaigns helps you achieve your targets.
This brings me to my next point: steps to help you measure your social media return on investment.
1. Define Your Objectives
In terms of business value and growth, what does social media success look like for you? It’s at this stage that you set realistic and trackable goals with clear objectives. This, in turn, will help you determine how your marketing efforts on social media are influencing your sales.
To help you define your objectives, we recommend the SMART framework:
- Specific – your objectives should be clear as day. For instance, if you want to increase your fanbase on social media, what does it look like? If you want 100 new followers or 1000 new page likes, make that clear. The more specific your goals are, the easier it is to track your progress and measure success.
- Measurable – all your objectives should be accompanied by metrics to help you determine if you’ve achieved them. If there is no way to measure a specific goal, strike it off your list.
- Attainable – while it’s okay to have lofty goals, they should be within your reach.
- Relevant – when defining your objectives, you want them to tie back to the bigger picture. Remember the likes and followers we mentioned above, think about how achieving that goal benefits your business and that’s where relevance comes in.
- Timely – every objective you define should have a time constraint by which you expect results. With a deadline in sight, everyone is accountable for ensuring targets are achieved. It also enables you to determine when and how often to check in on the progress. If it’s a longer-term goal, include some milestones to make the process easier.
For instance, here is Adidas’ growth strategy for the next five years to 2025 dubbed “Own The Game.”
The associated goals for their current five-year plan are:
- E-commerce sales to double to between €8 billion and €9 billion
- 9 out of 10 adidas articles will be sustainable
- Revenues to increase at a rate of between 8% and 10% p.a. on average 2021-2025
- Operating margin to reach a level of between 12% and 14%
- Net income to increase at a rate of between 16% and 18% p.a. on average 2021-2025
- Total cash return to shareholders to be between €8 billion and €9 billion
It’s clear that Adidas uses the SMART framework to come up with their objectives. Here is how their current growth strategy aligns with the framework:
Specific: Adidas doesn’t just want to grow their revenue; they have specific numbers they want to see by 2025.
Measurable: whether it’s an increase in revenue, operating margin, or net income increase, Adidas has percentages that will help them measure their progress over the years. These goals are not only measurable, they’re also tangible!
Attainable: Adidas hasn’t just thrown out some odd numbers blindly. They’ve made goals they know they can achieve based on their previous five-year plans and how they achieved those.
Relevant: Adidas’ new plan is designed to guide the company in achieving its overall goal “to significantly increase sales and profitability as well as gain market share until 2025.”
Timely: As you can see with all these goals, Adidas aims to achieve them by 2025.
2. Set Your Goals
I know what you’re thinking. Didn’t we just set our objectives above? Aren’t those our goals? Well, not quite! There’s a difference between goals and objectives. While objectives are a definition of where you want to go, goals are the definition of how you will achieve your objectives.
That’s where the S.M.A.R.T framework comes in as it helps you connect your objectives to your goals. Assuming your objective is to increase conversions. A relevant goal would be to identify a specific number of leads that would drive your conversions and lay down a plan to get those leads.
Alternatively, your goal could be something in the lines of ‘increase conversions on the landing page by 20% by the end of the year. Most importantly, remember that you can only establish attainable benchmarks by measuring past performance.
It’s from your past success that you can set benchmarks that will improve your performance to the next level. Similarly, ensure you’re clear of the value of each attained goal to your business.
3. Track the Right Metrics to Determine Your Performance
Measuring your success is highly dependent on the metrics you track on social media. As mentioned before, vanity metrics such as likes and comments are not measurable. However, they help you:
- Measure the effectiveness of your overall social media presence
- Measure how you are doing on social media against competitors
- Determine which of your content is resonating most with your audience
So, now the question is which metrics could help you prove your ROI? Some of the metrics to track are:
- Number of leads generated
- Number of sign-ups and conversions
- Revenue growth
- Website traffic growth
- Audience engagement
Each of the metrics you track should align with your objective in one way or the other. The best metrics to track are those that help you make decisions that benefit your brand. To determine which metrics to track, ask yourself these questions:
- What do consumers do after coming across my campaign?
- Does this metric help me determine the next course of action?
- Does the metric align with my objectives?
- Is it a metric that I can measure effectively?
While tracking your social media metric is essential, so is knowing when to track these metrics. According to statistics from Oracle, less than 50% of a campaign’s value is realized within the first month. What this means is that often, more than half the value of any campaign is realized long after the first 4 weeks.
Despite this, LinkedIn in their research found that over 70% of marketers measure their results within the first four weeks of their campaign. This goes to show that many marketers end up without the accurate ROI for their social media campaigns.
That’s why at Modern Day Pro, we recommend being patient with your campaigns before you abandon them for non-performance. Calculating your ROI too early could lead you to abandon a campaign that is on track to do extremely well.
4. Monitor Your Ad Spend
Tracking your metrics to determine ROI without monitoring your ad spend is a futile endeavor. It’s vital that as you record your analytics, you also keep an eye on expenditure, whether monetary or timewise. Some of the costs to monitor include:
Subscriptions and SaaS
Nearly all social media platforms are free to use and operate. However, to save time and increase productivity many businesses often invest in a social media management tool. Unlike social media platforms, these management tools are not free.
Fortunately, tracking the cost of running ads on any social media platform is easy. The platform’s dashboard keeps a record of any ads you run, how long they run, and what the total cost was. For brands running ads on multiple platforms, tools such as Hootsuite Ads allow you to manage multiple campaigns on multiple channels from one platform.
Whether you’re creating content yourself or outsourcing to an employee or freelancer, it costs time or money. This too is an important factor to consider before calculating your ROI. If you were paying for the content shared during your campaign, how much did you pay in total? If you created the content yourself, how much would make it worthwhile?
Time Spent on Social Media
The time you track in this case includes time spent scheduling and posting, creating and running ads, promoting content, and engaging with your audience. If you had to train someone or learn how to do it, include that in your calculations of time spent on the task.
5. Create a Report
Finally, to track your social media ROI, it’s imperative that you create a report that details input vs output throughout your campaigns. That way, visualizing your efforts vs returns becomes easier not only for you but for your team as well.
Despite how important this conclusive step is, nearly 40% of marketers fail to create ROI reports even after analyzing their efforts manually. In return, the lack of a report makes it even harder to compare results from campaigns over time. With the formula and steps highlighted in this post, creating a report might take some time, but at the end of the day, it’s a worthwhile undertaking.
Here are a few tips to help you create your social media ROI faster:
- Use a template: with a pre-built template, tracking metrics is possible even when you don’t have the time to create a custom report for every campaign you run.
- Simplify the language: the goal for creating a report is to make it easy for everyone who comes across it to understand. Presenting information clearly ensures that those who don’t understand social media data and analytics can comprehend your results.
- Relate your report to business goals: reports only make sense if they show how campaigns contribute to the business goals. A report is more compelling if it reads something in the line of - “Our goal is to increase conversions by 20%. Here are how our social media campaigns are contributing towards that goal.”
- State limitations: truth be told, regardless of how bad we want to do something, sometimes it’s not within our reach. If there are limitations that are in the way of achieving specific goals, lay them out in your report.
Planning and tracking your social media ROI can be a time-consuming task. Luckily, we’ve created this easy-to-follow guide that will help you define objectives for the different types of content on each platform, set goals for success, track the right metrics, and monitor your ad spend all in one place.
With our step-by-step instructions on how to create a report at the end of this post, you'll have everything you need to know about how well your marketing efforts are working!
Do you want us to walk through these steps with you? Let's chat now or schedule some time together so we can get started today!