How to Measure Social Media Marketing Campaign’s ROI? Here is Guide

Social media is a goldmine for businesses (after search) especially when it comes to creating social media marketing campaigns.

Social media marketing is a marathon that no one wants to miss!  

In fact, all your favourite brands can be found on your favourite social media platform.  

Why so? 

A social media marketing campaign costs half of what you’ll spend on a Google ad.  

But what about measuring the ROI?  

How would you know if your social media marketing efforts are offering any returns on your investments?  

Don’t worry, we’ve covered all your concerns (along with measuring social media ROI) in this detailed guide, below!  

What Is Social Media ROI? 

Before we discuss why you should measure social media ROI or how do it, let’s understand its definition!  

Social media ROI refers to the act of measuring how a business derives value from its efforts on social media. In other words, the social media ROI tells business how much profit they’ve gained through their social channels. It could be product awareness, new sign ups, or getting customer information for lead generation purposes. Each action is closely connected to a company’s commercial activity. 

Generally, social media marketers use this formula for calculating social media ROI:  

To figure out the ROI, you’d minus budget spent from net profit and multiply it with the value of 100.  

Don’t worry, we’ve discussed how to use this formula in detail below!  

Why Measuring ROI is Important?  

When it comes to social media marketing, we generally see two groups raising a valid question.  

To invest in a social media marketing campaign or not? 

So, let’s first try and understand why measuring social media ROI is important and circle back to this question later. 

Every brand has a separate objective associated with their social media marketing campaign. Some seek to aware their core audience about their existence and the products they offer. Others, they want to generate quality leads from their followers or people seeking products/services they offer.  

From Spotify’s Wrapped campaign to Airbnb’s “Live There”, you’ll see a diverse range of campaigns on social media. And all of them focus on a different objective. Both these social medial campaigns generated millions of views and user interactions.  

If these brands measure the ROI of the campaign, they can assess which platform is performing well. And they’ll have a clearer picture where they should invest their money and energy more in future. 

Measuring social media ROI allows you to ensure that your efforts are offering the desired results. And even if they don’t, you can review your strategy and optimise your campaigns.  

How to Measure Social Media Marketing Campaign ROI? 

We’re aware of the formula used for measuring social media ROI, but there are a few steps that we’ll be following.  

Setting goals, measuring KPIs, and giving our social media marketing campaigns are all essential part of the process. And we’ve narrated each one in detail, below, for your understanding.  

Let’s discuss how you can calculate social media ROI for each campaign that you design for your business!  

Step # 1: Set a Clear Campaign Goal 

The first step, before we get into numbers, is to define a specific goal of your social media marketing campaign! 

Decide what exactly are you seeking to achieve with this campaign?  

Some seek brand awareness, and some want customer engagement. Sometimes, brands choose to generate quality leads or send their followers to a specific product page.  

Decide what are your objectives out of this campaign so you can assess its performance accordingly.  

Step # 2: Select Campaign KPIs 

After setting a primary goal for your social media campaign, the next step involves selecting its KPIs!  

KPIs, or key performance indicators, can vary from campaign to campaign and look something like this:  

• Impressions – Number of times your social media ad was viewed by the users.
• Account reach – Accounts who viewed your ad on a social media platform.  
• CTR – A ratio of people who clicked on your ad from the total viewers.  
• Conversion Rate – Refers to users who performed the desired action upon viewing your ad.

Let’s understand this with an example! 

Suppose, Coca Cola has launched a new product, and they want to introduce it to young market segment (Millennials & Gen Z). They’d look at the total impressions, CTR, account reach, and conversion rate of that ad. These insights would help the brand understand success or failure ration of their campaign.  

Step # 3: Set a Monetary Conversion Value 

Once we select our KPIs, the next step (in measuring social media ROI) is to set a monetary value!  

Suppose you’re an ecommerce store who generated $50 revenue from your campaign. And you’re aware that about 100 visitors made a purchase after visiting your website through social media. You can give each visitor $0.5 average order value (or AOV).  

The idea here is to understand the average sale value of each visitor/customer that you’d acquire from the campaign.  

Step # 4: Calculate Overall Campaign Cost 

The 4^th step, for calculating social media ROI, involves measuring the overall campaign cost!  

In this step, you’ll figure out all the direct investment that you’ve made for run the ad. And you’ll calculate the indirect cost (team and equipment charges) for making the ad.  

Suppose you set aside $1200 ad budget for your product, spend $400 on photography, and $300 on tools. Your social media marketing campaign cost would be $2000/- in total.  

Step # 5: Analyse Campaign Performance 

Now comes the part where we’ll deal with numbers and data! 

For assessing your ad’s performance, you’ll require an analytics tool such as Google’s Analytics. Connect it with your social media accounts (where you’d run the ads) so it gathers every information we’ll need. 

Now, look at all the KPIs that we discussed in step no. 2!  

For example, your social media marketing campaign generated 500k impressions. But it failed to generate much engagement on all platforms. This scenario suggests that your campaign demands a few tweaks for performing as per your expectations.    

Step # 6: Apply ROI Formula 

In the next (and important) step, we’ll apply our formula to measure social media ROI that we discussed earlier.  

Starting with total revenue of your conversions, you’ll exclude the campaign cost and multiply it with the value of 100.  

You have figure of revenue generated from total conversions by now. First, subtract the total campaign cost from the revenue and divide it with the same value. Lastly, you need to multiply the answer with the value of 100 for conclude total social media ROI.  

Let’s just say we generated $10, 000/- total revenue and spent somewhat $2000/- on our social media marketing campaign. According to this formula, our total social media campaign ROI would be 400%.  

Step # 7: See Beyond KPIs  

One last step, for calculating social media ROI, is to see beyond numbers!  

Along with calculating your campaign’s success or failure in numbers, you can use a few other metrics, too. You can use this campaign for social listening, measuring brand loyalty, and customer feedback, too.  

With these metrics, you can successfully create an improved buying experience for your loyal customers. And design a better social media marketing campaign next time. 

Conclusion 

And with this, we wish you all the best for measuring your social media ROI!  

But before you leave this page, here are a few tips for optimising your social media marketing campaign if results aren’t desirable: 

• Run an a/b testing with different ad creatives and content.
• Make use of demographics and behavioural data for selecting audience segments.  
• Run a retargeting ad for visitors who showed interest in your services but didn’t buy the last time.  
• Run your social media ad when your audience is most active on a platform.

And if you still need help in creating a social media marketing campaign or optimising the ROI, our experts are here to help. Dial +971 4 238 7608 or write us at dxb@logixcontact.com and get your free social media marketing consultation. You can visit our office in Dubai.