Recently, Twitter had their 10 year anniversary of their first tweet. 12 years ago, Facebook officially went live as a product we know of today. Today, both of these major platforms have a combined total user base of over 2 billion people and businesses. When you add in other social upstarts and apps such as Instagram, WhatsApp and Snapchat, you can add in another 1.6 billion users. And even with these staggering user stats and singular places to reach a massive audience, businesses all over the world are still reluctant to invest more in social media, or even make a leap into social media at all. Much of it stems from time and staffing levels, an inability to see value from higher-ups in many organizations, monetary constraints, lack of knowledge in their use, or just a failure to see or have the ability to measure ROI of social media as a whole. We hear a lot of these responses, but the question of ROI seems to be a major factor in determining social media’s place in an organization’s marketing strategy.
So how you determine social media ROI?
It’s a very tricky question to answer for any business but much of it has to do with trying to determine what the goals of your business and marketing efforts are in the first place. If you are basically any business, branding and brand recognition should nearly always be at or near top of your marketing and social media goals. Even Coca Cola and McDonalds never stop in their own branding efforts as evidenced by their TV ad spend, and especially their investment into their social media efforts among other campaigns. Look at companies like Red Bull who plaster their brand over an ever-growing stable of extreme athletes. An eCommerce business probably has an additional goal where they can utilize social media for branding purposes as well as drive traffic to their website which will ideally lead to a web sale. So, the first place to start for any business is to determine your goals, determine what the metrics are to measure these goals and then start to determine the ROI of your social media efforts.
As branding should be the goal of nearly every business, there are a few good metrics you can use to help determine if social media is working in your favor. Reach on Facebook is one great metric to review. Reach is simply the number of fans and followers that had the opportunity to see your post. So how do you boost reach? Since the life of the average post on Facebook is around 1-3 hours, you should be posting when your fans are online the most. Your Facebook Insights is the best place to look for this data. Insights is a great metric to look at on a regular basis. Just like a TV commercial, you want the as many people to see your posts as possible.
This is the actual interactions that people have with your posts across all your social networks. To calculate, add up all these interactions such as Reactions, Comments, Shares, Retweets and so on and divide that number by your total number of fans across all these social networks.
Why is this an Important Metric to Track? Many studies show that users who engage most often with a brand tend to view the brand in a positive light. And those people are also more likely to make a purchase from that brand and recommend that brand to their friends. And while most social networks these days have made it harder for brands to increase “organic” engagement through algorithm changes, one can improve the engagement of their posts in large part to one central theme: Better Content Equals More Engagement. In other words, give people what they want or solve pain points and you will see engagement go up.
Traffic To Your Website (or Store)
Driving traffic to your website shouldn’t be your only goal or your primary source of content. Ultimately, you should track how people are coming to your website by way of social media channels. One easy way to track this is looking at your Google Analytics account and look at the Social Network Referrals page. This wills how you exactly how many people came to your website by clicking on a link within a given social media channel. From there you can see which links people clicked on in that social channel. This can tell you not only the number of referral clicks from that channel but also what type of content is resonating with people. If you want to dial in even deeper, you can create individual link campaigns in Google Analytics. You can do this by creating unique tracking URLS for each social channel to see which channel is working best and also which is leading to the most sales or conversions. This way you can get even more granular about which social channels are driving click-thrus.
A conversion is simply defined as an action on your website that you want people to take. It could be an email sign up, a PDF download, a new potential lead, a completed sale, time spent on a page or even a video view. While many businesses want sales directly from social media, this attitude is gradually changing and greater importance is being placed on non-financial aspects of social media marketing. Conversions are another metric that can be tracked within Google Analytics once you have determined what conversions you want to track and creating those goals to track. That entire process is for another day but setting up goals and conversion tracking in Google Analytics is imperative in measuring effectiveness for your social media ROI.
While this may not be a primary goal of your social media efforts, or even a goal you create to determine ROI, there will be some who want to know exactly how much in sales is directly attributable to your social media efforts. One caution would be to not only use sales as measurement of social media ROI. This might be a tougher sell to some CEOs who are primarily focused on top line growth. While this can be a key metric to track for businesses who sell products or services directly on their website, it might not be a metric for someone like a restaurant whose sales come 100% from offline activity. There are ways for restaurants, storefronts, bars and other offline business to at least measure individual campaigns that you may run from a Facebook page for example. A good example might be running a coupon or offer where social media is the only place to pick up such a deal. From there, you can calculate how many coupons/offers were brought in and how much in sales those tickets generated. But for those wishing to measure sales in their online channels where they can attribute to social media efforts, it can be slightly more daunting. Utilizing Google Analytics and under Reporting/Acquisition/Social/Conversion tabs, you will be able to see whose people who were referred by a social network and consequently those visits which led to a sales conversion. This is just one way to measure revenue attributable to social media activity or sales ROI.
You can see from some recent surveys from current CMOs which metrics are most important to measure social media ROI. A few metrics are revenue related.
To figure a true cost, or ROI, of your social efforts as it relates to sales or actual revenue generated, you also need to know what you are spending in and on for your social media efforts. But again, this is but one aspect of social media ROI; using revenue as metric to track. The easy and most basic way to calculate this is a simple math formula:
Social Media Revenue ROI(%) = (Revenue Generated from social media – Cost of social media marketing)/Cost of social media marketing
So if you generated $1000 in sales and spent $800 in marketing dollars, your ROI would be 25%.
You also need to determine which costs are associated with these efforts and campaigns. Examples of costs would include time or labor, agency costs, advertising spend and any other additional marketing spend such as product giveaways or subscriptions.
It is advised to use 3-5 metrics that are important to your business goals, especially when you have higher-ups who want to know what the value of social media is on a regular basis. This list and article is not an exhaustive list on the metrics you can use to help determine an ROI of your social media efforts but it should at least get you started in the right direction.
A report is something you can create in an Excel sheet, but I always recommend using graphs and graphics whenever possible as a way to better visualize the data, and make it more consumable. In this case, a PowerPoint might give you the power to show how your efforts are helping your ROI and prove the worth of your efforts. If you don’t have the time or ability to create the proper reporting on measuring your goals and specific metrics, it may be time to consider hiring an agency for some or all of your social media efforts.
When utilizing an agency, you have the advantage of not only years of expertise but also the software and platforms to dig deeper into the data and how you measure your social media ROI. We have the ability to look at the things that matter the most to your CMO or marketing executives. Things like social influence, brand sentiment, brand mentions across the internet, virality, competitive analysis and many other deeper dive indicators that can elevate your social media across all channels.
Zunesis’ Stream platform allows you to take a deeper dive into what is driving your social audience, brand sentiment, influencers and responding to them in real-time. You might wonder how you lived without it after you start using it.
While vanity metrics such as Likes or Reactions seem to consume most of any business’ social strategy, taking the time to sit down and create a set of metrics to track those goals will not only help you determine an ROI of your social media efforts, it will also give you a path to elevate your social media efforts and even surpass your goals. The data is there, now it’s up to you to make the time to use it, report it and make actionable insights for optimum results. You will not only save time, but you will become more productive and most likely you will see an increase in revenue as a result. But if you don’t have the time or expertise, don’t throw darts at a wall and hope for the best! Hire someone who can do this and you will reap the benefits. Social media is here to stay, so you might as well use it to grow your business.