ROI: Return on Investment in Social Media Marketing

social media roi

This week I continue my series of posts on Return on Investment (ROI) to support your investment in social media marketing. You can find an earlier one with the titillating title, Why it’s stupid to measure ROI.

I’ve devoted a lot of space on this blog to discussing ROI because it’s a critical topic and something that most traditionally trained marketers are unfamiliar with since it’s hard to demonstrate the ROI of traditional media campaigns. Most recently, I posted concerns that social media marketing isn’t generating the kind of ROI users hoped for.  Whether marketers achieve rewards from their investment in social media marketing is a perennial question asked of marketers (and increasingly by others within the organization) as a means to not only show the value of this marketing strategy but to offer insights to help improve performance. One of the main reasons why firms focus more of their marketing dollars on social media and digital campaigns, in general, is that it’s much easier to achieve these twin goals in digital versus traditional media, which is kind of a black box when it comes to demonstrating ROI. The other reason more marketing dollars go into digital, in general, and social media specifically, is the higher ROI of this investment, as you can see below.

return on social advertising

Your investment in social media

With so much going on, especially in a small company where everyone wears numerous hats, you may not know exactly how much of an investment in social media you make every month or over the course of a year. Sure, it’s easy to check your accounting records for the sums paid in social media advertising, but you may not track all the efforts that go into creating ads and organic posts, responding to comments, and engaging with your followers in other ways. These efforts are integral to achieving a return on your investment in social media. I’ve even heard clients say that organic social media is free but the truth is that social media, even without advertising, is far from free. Here are some expenses to consider:

  • Salaries or apportioned salaries for content creators, including those crafting images and videos to share on social platforms
  • Software uses for
    • marketing automation, such as Buffer
    • analytic tools to track performance, such as SEMRush
    • content creation such as ChatGPT and Canva
    • listening software
  • Supervision expenses, including managers who create content calendars and approve posts prior to publication for voice and branding

Don’t make the mistake of using just any employee with some idle time to create posts on your social platforms.

Post consistency

First, you need consistency across your social platforms to ensure you get the most return from your investment in social media. Publishing occasionally or haphazardly doesn’t work toward building an engaged community to support your marketing goals. You must publish quality content on a prescribed schedule to get results, otherwise, your efforts are likely wasted. Below you can see recommendations on posting schedules across some popular social platforms.

optimal post frequency on social media
Image courtesy of Plug and Play Tech Center

Each post must provide value to your community and present a consistent voice to support your branding efforts.

Skills necessary

You can’t just use your admin assistant or an intern to ensure your social media campaigns are top-notch because it takes specific skills to do social media marketing for a brand beyond the requirements needed for a personal social media effort. It takes more than the ability to string a sentence together with correct spelling. Here are just some of the skills needed for social media marketing:

  1. Communication
  2. Writing, including an understanding of how to write in support of the voice and branding
  3. Creativity, since boring social posts don’t help the brand. Instead, you need excitement and energy in your posts.
  4. Project management to ensure everything comes together on your timeline
  5. An understanding of marketing concepts like segmentation, creating personas, and understanding market segments
  6. Customer-focused to help users get the support and help they need
  7. Agility to move and adapt to opportunities and threats
  8. Data analysis to find insights
  9. Budgeting

And, these skills are hard to find as training can’t keep up with the demand for professionals with these skills.

5 steps for getting a return on your investment in social media

Step 1. Set objectives

Setting objectives may sound kind of simplistic and unrelated to assessments of ROI, but it’s really a critical first step. Without some notion of what you want to achieve, how can you assess ROI?

Obviously, the end game is SALES. But, since you’re likely not SELLING anything through your social media, you can’t directly measure sales in calculations of ROI. Instead, establish a list of KPIs (key performance indicators) based on the criteria shown below. Establish objectives for each KPI and monitor your performance toward attaining that objective.

what are kpis
Image courtesy of Crazy Egg

Remember, you need KPIs that assess the top of the funnel (such as awareness and reach), the middle of the funnel (such as subscribing to your newsletter or creating an account), and the bottom of the funnel (conversion). You might also establish KPIs for loyalty, writing a review, and evangelism that follow after conversion.

Step 2. So, what should you measure?

Here’s a handy infographic I created to show actions that drive success in social media:

conversion funnelUnlike the sales funnel, you don’t have to wait for customers to fall out the bottom to realize ROI. Each phase in the hierarchy creates sales and generates ROI.

But, unlike the more traditional hierarchy of effects, the social media hierarchy depicts additional actions by your community that reflect loyalty, sharing, trust, and advocacy. These actions have effects far beyond creating ROI, but spread your message, increase your brand mentions, create a positive image for your brand, and encourage others in the social network to purchase the brand — thus amplifying your ROI across social networks.

Based on this infographic, you establish objectives for and measure each element in the hierarchy.

Step 3. Collect relevant data

Once you set objectives and know what to measure, you’re ready to collect data. Some data are readily available from Google Analytics, Facebook Insights, or other sources. Using UTM tags on links shared on social media helps you follow a click from social media all the way through your website from entry to exit.

Other data, you need to collect using survey instruments or qualitative data collection from interactions on social networks and I provide some instructions on how to collect qualitative data from your social networks here.

I think it’s important to collect both deep data that provides a snapshot of where you are and high-level data that plots trends — at least over the last month, 6 months, and year — if your social media marketing efforts extend that far. In plotting past data, be sure to capture and record major changes over the time span. For instance, if you added a new channel, Facebook made some major platform change, or Google made a major change to its search algorithm. In the monthly plot, you should also plot your own marketing efforts, such as a newsletter date, a new blog post, or an important social mention.

Step 4. Analyze data

Part of your analysis comes from plotting data against your marketing actions. You should also look at competitors’ marketing actions, especially their social media actions. As a final step, you should assess how external factors impacted your results. Let’s say, your competitor announced a new product or uploaded a video that went viral — your results for a few days might be off a little. Or, let’s say something popped in the news, and keywords related to this news brought a lot more traffic to your site for a few days. You need to correct these anomalies because you’ll never reproduce them.

Now, look at trends from your plots.  What are they telling you?

  1. Certain types of posts generate significantly more (fewer) visits
  2. Certain days of the week or time of day for sharing generates significantly more (less) visits
  3. Certain actions generate more (less) engagement — ie. comments, sharing, liking
  4. Certain types of content generate more (less) engagement
  5. Where folks come from

If you now match the trend between what HAPPENED in social media with your ROI, you should see a lag with a similar shape. Thus, as the number of engaged users increased, you should see an increase in ROI — although a lag between them is normal.

A lag occurs because people don’t immediately go out and buy your product as soon as they see a post related to the product that piques their interest, although buying through social media is beginning to change this trend. Some brands, such as a new restaurant, take a few days because people may not go out to eat the same day they liked the brand. Some brands, take longer. For instance, a new toothpaste requires me to use most of my existing toothpaste stock before replenishing with the new brand. So, you need to understand consumer buying behavior to assess how long a lag you should expect.

The problem occurs when you never see the change in ROI. This might happen when you “bought” likes rather than gaining engagement organically. What I mean by “buying” likes is that you held a contest or something to make people like you. These likes may not reflect your target market and they may not even truly like your brand.

A longer lag is common in driving consumers down the hierarchy — from liking toward evangelism. But, the improvement of ROI is also bigger as you move down the hierarchy because these folks spread your message to their networks, thus amplifying your reach.  So, don’t forget to spend some of your social media marketing effort on gaining more engagement and driving more evangelism.

Now, you can use your marketing costs and lagged profits to calculate your ROI. Better yet, you can establish the value (in dollars and cents) of each like, each comment and share, and each evangelist to your firm.

What information comes from qualitative or other deep data?

  1. Evangelists — who they are, where they come from, and what process created them
  2. Detailed information about each type of visitor — demographics and on-sight usage information
  3. How do people talk about your brand — what are their favorite features/benefits; what do they like least; are they having problems?  What are their “hot” buttons
  4. What else do your customers need — this is a great tool for new product development and improvements to existing products.

Step 5. Action

Of course, data analysis isn’t the point of everything we’ve talked about — and measuring ROI isn’t enough.

You want to improve your ROI. But, how?

Well, certainly you want to do more of whatever worked and less of what didn’t.

In your analysis, your social network told you what they wanted. In general, this is what users want to see from brands.

what users want to hear from brands
Image courtesy of Sprout Social

Now, do it.


OK, that’s enough for today but you can find lots more information on measuring ROI and how to get more from your investment in social media by searching these pages. You’ll also find a few related posts at the end of this post to get you started on your question to get more from your investment in social media.

As always, I welcome your questions and suggestions on this topic. Just enter them in the comments section following this post.

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