September 8, 2017
4 Ways to Determine Marketing ROI for Social Media
Social media has become a primary focus of many companies’ marketing activities, but those companies often create and spend large budgets for social marketing without attaching a value to their efforts. As a result, they are struggling to quantify the ROI for their spend.
It’s possible to accurately calculate ROI for your social media efforts, but it requires a realistic understanding of social media’s value, proper goal setting, comprehensive planning, and detailed evaluation. You can measure returns in several ways, including counting likes, fans, followers, and re-tweets. Ultimately, however, the true ROI will lie in the amount of tangible leads that are generated. Companies that use social media to attract and cultivate leads are more likely to have an accurate understanding of how their investment translates into returns.
Here are some steps to help you effectively determine your company’s social media marketing ROI:
Understand the value of social media.
Social media is a hybrid of PR and marketing. It is designed to gain exposure while engaging in techniques that will promote and sell a company’s product or service. Understanding this helps you understand how to accurately assess what should be measured in association with cost. Because social media is a promotional platform and not a sales funnel, exposure and engagement are both significant in the appraisal of its effectiveness. The best way to measure the value of social media realistically is by collecting data on the number of leads (potential contacts interested in your business) that you capture through likes, fans, followers, shares, and comments. That way, you can discern how to develop a realistic goal that can link to your ROI.
Determine a goal.
Once you gain clarity on the value of social media, you want to then identify a specific goal. This goal should be realistic and measurable so that you are able to directly trace and connect the success of your efforts. The goal will allow you to forecast your best path so that you can conduct effective campaigns. Realistic goals are typically based on the number of new fans or followers, downloads, email captures or engagements on posts. Once a goal is established, you are better equipped to uncover the value you’ve gained as a result of your efforts. For example, a real estate brokerage who wants to acquire other realtors could have a stated marketing goal of obtaining 20 realtor leads by year’s end, which demonstrates a measurable desired outcome that can be traced to the value of the investment.
Choose the right platform.
Not all social media platforms can help you meet your goal. You want to develop a comprehensive plan that helps you organize and track your efforts, while providing you with direction on how to market effectively. Because different messages on different platforms resonate with different audiences, you want to be able to choose an environment that is indicative to attracting leads. Determine where your audience spends most of its time and occupy that platform consistently. The key to measuring your marketing effectively lies in the ability to determine which platforms you will flourish on. If we continue to use the real estate brokerage example, LinkedIn would be an ideal platform to promote, because statistics show seasoned professionals are members, which would enhance the probability of meeting the goal, thus improving the ROI.
Evaluate your success.
Lastly, you want to develop a detailed evaluation component that references your stated goal, so that you can assess what you’ve achieved. Create a tracking chart (e.g., monthly, quarterly, weekly or daily) that consistently monitors your social media interaction. You can also use other analytics from each individual platform—or other services such as Google Analytics—to assess whether your investment helped you meet your stated goal. For example, you can count the number of LinkedIn connections you have made weekly in order to determine if the value was worth the investment.