Social Media ROI

Social Media ROI: How to Prove That It’s Worth the Cost

How much is social media worth to your business?

When you’re spending time and effort on social media marketing, it can sometimes be difficult to calculate the ROI.

In this article, we’ll show you how to measure and prove your investment in social media marketing.

What Is Social Media ROI?

Your Social Media Return on Investment (ROI) is measured by the amount of value generated as a result of social media.

It provides an estimate of the money you’ve spent on your social media marketing and calculates what it’s worth to your business.

One person may define this as revenue generated, while another might say it’s about brand awareness and influence.

Metrics can be non-monetary, such as how many followers you have or how many impressions a post has received.

Why Is It Important?

Understanding your Social Media ROI is important because it:

• Tracks your return on investment for each social media platform you are using.

• Provides a measurable way to measure the success of your marketing campaign.

• Helps determine which platforms are best for reaching different types of customers or prospects and how much time, effort, and money should be allocated towards them.

For it to be meaningful, you need to have a goal in mind.

Goals can include anything from increased sales revenue or higher customer satisfaction rates.

You can utilize the social platforms’ metrics to help you establish your current baseline and future objectives.

How Do I Calculate It?

The basic formula for calculating social media ROI is:

ROI = (Revenue Gained / Cost of Effort) x 100

For example, if you gained $100 in revenue and spent $20 to get it:

ROI = ($100/$20) x 100= 500% ROI.

This means that for every dollar invested in social media marketing, your business is getting $500 in return.

This is a pretty good ROI and it may mean that you should invest more money into social media marketing to get the most out of your investment.

What is a good ROI?

Well, that is up to you.

Is the amount of money your spending on your social media marketing worth the results that you’re seeing?

Most experts agree that anything over 50% is a good ROI, but this will vary depending on your business goals.

What Can’t Be Measured?

Looking at all your number is one thing, but there are some things that Social Media provides that are hard to quantify.

First, it establishes an online presence and can help drive a perception about your company.

A good-looking social site with some kind of content plan can provide a good first impression for someone doing initial research.

It also assumes a certain amount of transparency and social proof.

If a customer has a choice between a company with frequent posts and one that engages its readers versus a company that has no presence, they’ll likely choose the one with a good presence.

It can help build relationships, which is hard to measure but not something that should be dismissed because of that.

Social media can be used by newer companies to help develop their brand’s personality and provide them with a voice.

The online interactions with your brand will often lead to offline mentions or conversations, which can still generate effects that would be difficult to pinpoint back to an origin.

Hopefully, this has provided you with a general sense of how to calculate your Social Media ROI.

Mike Nicholson

I've spent my career working in a variety of Strategic Communications, Public Relations, Public Affairs, Information Operations, and Executive Outreach positions. With a history of planning, preparing, executing, and assessing communication strategies in the U.S. and abroad, I use this site to write, think and share lessons learned on organizational communications.

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