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How do you measure ROI in Social Media Marketing – A Full Guide

ROI stands for Return on Investment which is used to know the efficiency of investment by measuring the performance. When we want to calculate the amount of return on a particular investment respective to the investment cost. In social media marketing, ROI is the sum of actions taken on social media that create value. 

If you are working on big plans for your online business in 2021, the this article about ‘Role of Social Media in Digital Marketing in 2021 – How to Plan Ahead

Types of Spend in Social Media Marketing

It doesn’t matter if you are selling a product or a service, starting a social media marketing campaign is important.

Before starting with a social media campaign, it’s better to start with a budget because there are three major spending areas in social media marketing.

For getting better results you have to dedicate some amount of money for different social campaigns. 

types of spend in social media marketing

Let’s hear out about the types of spend in social media marketing- 

1. Unpaid Social Campaigns

Unpaid Social campaigns are organic ones. The post which you make on social media without paying any single penny comes under unpaid social campaigns. You can start an unpaid social campaign by posting free with a social account.

All the techniques which do not involve any investment of money to promote a service or a brand are part of Unpaid social campaigns.

Benefits of Unpaid Social Campaigns

(a) Cost-Efficient: Unpaid campaigns are the most cost-efficient way to produce content on social media. As it does not involve an investment of a lot of money which makes it a sprocket friendly as well as an effective way to promote your brand.

(b) Adaptable: Without spending money, your team can experiment on a new type of post. In this, you can easily get to know what are the preferences of your audience.

(c) Build Better Relationships with customers: The content which always stays on your site has a better influence on people following you. As all these posts made by you will stay on your profile always and can be easily shared by your audiences.

(d) Authentic: Organic media has a transparent face. It is given by customers voluntarily that’s why it is considered more authentic as compared to other campaigns.  

2. Paid Social Campaigns

When you pay to a third-party channel to promote your product or a particular service, it is called paid social campaigns. The action which you want user to take must be a part of your paid social campaign.

Planning the first action of the user will help you in deciding what kind of advertising you want for your product.

The paid campaign allows you to drive traffic to a particular piece of unpaid media. With an objective in mind, you can achieve your goals with paid social media campaigns easily.

Influencer marketing, sponsored ads, and content promotion are the type of paid promotion which are generally used by businesses to drive traffic, generate revenue, and awareness.    

Benefits of the Paid Social Campaign-

(a) Budget-Friendly: You can customize your campaign according to your budget. If you want to run ads, you will get an option to decide your daily budget which is the best feature of paid ads.

This allows you to target a large group of an audience as well as a small group, it all depends on your budget. 

(b) Immediate Results: Paid media gives you fast results as compared to organic social campaigns. Once you have placed your payment, your content will be delivered to the desired audience.

(c) Controllable: Paid social campaign can be completely controlled by you. You can control your budget as well as ads placement. If you want to target people of a particular region, gender, age, or interest, paid social campaigns will award you with such features.

3. Social Media Management Expenses (Paid Tools)

Managing social media is not as easy as it looks. Some people still do it manually but most of the professionals these days take the help of tools to manage social media. The main use of the tools used by professionals is to analyse, monitor, and scheduling posts.

Not everyone requires such kind of application, but the professionals with many clients find it difficult to manage all of them at the same time. Thus, using management tools help them in making their work less hectic.

For managing social media many tools are available in the market which can help you in making your tasks easier.

(a) Buffer

Buffer is a social media management tool that is trusted by many brands, businesses, agencies, and individuals. This tool helps them to drive engagement and results on social media. It makes your work easy and effective with great results.

Buffer offers you many monthly plans according to your requirement.

(b) Hootsuite

If you want to manage all your social media in one place, then Hootsuite is the best option for you. Hootsuite is the most loved platform for all the marketers because it allows users to curate and schedule posts, run social media ads, measure ROI, and many more.

(c) Sprout Social

Sprout Social is a tool that is quite similar to Hootsuite, it also provides a single platform for social media to monitor, report, and schedule posts. It comes under the list of some tools that have customer relationship management (CRM) features.

Reports made by Sprout Social are so perfect that sometimes they don’t need to be edited, you can just download and send it to your clients.

(d) Agorapulse

AgoraPulse is also a social media management tool that has some unique features like Facebook contest apps and competitor analysis. These are provided at a very affordable price for the users.

(e) Sendible

Sendible is designed mainly for agencies having several clients. You can customize the dashboard according to your needs to attract new clients. It also has Canva and Youtube search integrated.

(f) Tailwind

Tailwind is an online tool for Instagram and Pinterest post scheduling, but it does more than just that. Tailwind has many other features that not only help in scheduling the Instagram post, but help to optimise hashtags, timings of posting, and captioning with its machine learning ability.

It has some really cool features as well like Smart Bio for Instagram and Pinterest Tribes for Pinterest. There is a complete article I’ve put together, which you can go through to learn in details about how to use Pinterest for marketing of your Online Business in India.

Benefits of Social Media Management Tools

(a) Plan Ahead: Advance planning always helps in social media marketing campaigns. By using social media management tools, you can plan your future posts for any upcoming events. This will help you in staying consistent with your posts.

(b) Time-efficient: If you are using social media management tools, you can save a lot of time which you have to invest in social media management when doing manually.

(c) Analyse your interactions: A major benefit of these managing tools is that you can easily analyse your competitors. It also includes engagement over one platform based on audience demographic and month over month trends.

Types of Returns on Social Media Marketing Spend

When you decide to start a social media marketing campaign for your brand, you must know the type of returns you will get through social media marketing spend.

There are mainly four types of returns on social media marketing spend. Some of these are measurable whereas some are not. 

social media marketing returns benefits

Let’s look all these returns on social media marketing spend, which you can and cannot measure in terms of data:

1. Brand Value Creation

You create a valuable brand by making it trustworthy, relevant, and unique. Most of the businesses that perform constant efforts to create a great brand value, results to have better returns as compared to their competitors.

Although one cannot measure the returns through brand value creation, it can be seen by the difference in the engagement of people with your brand. 

2. User Satisfaction

A satisfied customer is always a good sign for your brand. If you can satisfy your customers with your service or products, then it is a big win for you. People consider it as a major kind of return.

It cannot be measured by using any tool, but you can have a check on it by seeing the reviews of the customers on your portal. 

You can also see how many loyal customers you have made which means a count of customers who are making a purchase again after buying a product from you in the past.

A loyal customer will benefit you in many ways like they may recommend a friend or family member to buy that product from you.  Thus, usually people give so much importance to user satisfaction because it is a kind of return too. 

3. Direct Lead Generation

All businesses use lead generation to increase the involvement of people with their brand. Getting quality leads helps in generating revenue for your company which is the ultimate goal of most business owners. It also assures you by giving high returns which can be measured by using various tools. 

4. Demand Creation

Generating awareness and interest of people for a brand is a major purpose of demand creation. Good ROI is generated through this which is measurable. 

How to Calculate ROI in Social Media Marketing?

Measuring ROI in social media marketing can be difficult. Not everyone has a clear insight into the ROI. 

Here is a standard formula which is generally used to calculate ROI-

Amount Gained (Profit) – Amount Spent x 100 / Amount Spent = ROI %

To make the process of calculating ROI in social media marketing a bit easier, it is divided into some easy steps.

1: Set Social media goals

2: Determine Right Platforms

3: Track Campaigns

4: Report Findings

5: Review results and reset goals

how to calculate ROI in social media marketing

Step 1: Set Social Media Marketing Goals

You can measure ROI through various ways like customer satisfaction, brand value creation, direct lead generation, and demand creation.

Before measuring social media marketing ROI, you have to decide your goals. Because some of these goals are measurable but on the other hand, some aren’t. Thus, setting your goal is the first step while calculation social media ROI. 

After knowing your goals, you will have a clear vision about the next step you have to perform. 

Step 2: Determine Right Platforms

All of your social media goals and results you are expecting must be aligned with the social media platform’s uniqueness. There are many social media platforms available like Facebook, Instagram, Pinterest, Twitter, and many more.

You have to know where your targeted audience is spending most of the time. Know which platform is ideal for you and your audience. Finding the right fit platform will help you in achieving your goals in a short span of time. 

After knowing this, you will be ready to get started on social media and you will get to know in which social media platform you have to focus more. 

Step 3: Track Campaigns

Keep track of the activities happening in your social media marketing campaigns like time spent, cost of ads, etc. Make it as an unavoidable part of the process. 

For this process, you can also use social media analytical tools to make your task easier. 

Step 4: Report Findings

You should make it a habit of reporting all the data every time. Whether you are reporting to someone or you are doing it for yourself, it doesn’t matter.

You should determine a way to report the data. Decide a time span in which you will be needing reports. For example, you can take weekly reports or go for monthly reports if you have a lot of work. 

Use unique reporting templates provided online for Facebook, LinkedIn, and other platforms. Making reports will help you in analyzing the data more effectively and comparing your past data with the current data will get easier.  

Step 5: Review results and reset goals 

After getting all the stats, you can calculate ROI easily with the formula mentioned above. Now, you can review the results and know whether you need to put more effort into the campaign or not. 

Go through the metrics to drive changes in your social media marketing campaigns. 

How to Optimize the Spend for Better ROI?

If you are worried that after spending so much on social media marketing campaigns, the ROI is not getting better then stop panicking. This happens to many marketers. Optimizing your strategy a bit can help you in getting better social media ROI. 

Here are a few tips and tricks for better ROI- 

1. Test and Optimize

Sticking to the same pattern will not benefit you in the long run, so keep your testing game always on. If you are running social ads, try to experiment ads by changing audience preferences, or ad format.

See the new results and take action accordingly. Like, if you find good results after the new changes, try it with other campaigns too. And if results are not as you wished them to be, go for a new strategy.

2. Analyse the Data

Analysing the data faster and in a structured way can assist you in the path to get a better ROI. You need to find out the post or content posted by you with the highest rate of conversions. Go through the insights and study why that particular post has better engagement as compared to other posts.

Apply the results in your upcoming post and measure the results. By doing this, you can analyze the data much faster in a systematic way.

3. Adapt New Changes

Nothing remains the same always, change is a continuous process. The same is for social media, it also keeps changing with time. Thus, you have to keep changing your strategies and content because the content that is engaging your audience today has no guarantee to engage the audience in the future also.

If you want to get a better ROI with your current spend you have to adapt to new changes. Adapting them will help you in growing and learning new things to optimize the whole process. 

Conclusion

Knowing the success of your present and past campaigns can become easy by measuring social media ROI. By measuring ROI, you will get to know valuable insights about your campaigns and will help you in understanding the changes you have to implement in the future.

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“This post contains affiliate links, meaning that if you choose to click through and make a purchase, I will receive a small commission at no cost to you.”

About Nandini

Nandini Yogi is Co-creator and Senior Editor at Online Business in India . She is Writer by Heart and Business Developer by Profession. You can connect with her on LinkedIn and Instagram.