Why Is Knowing Social Media ROI Important?
Because it can tell you which social media platforms and sales tactics work best for your brand, and which are falling flat and need to be eliminated or seriously revised for better performance.
You can compare likes, saves, shares, views, comments, and sales made or leads gathered! But it’s still very hard to measure your return on investment (ROI) for social platforms like Instagram, Facebook, Pinterest, TikTok, and LinkedIn without proper tracking and analytics. Especially with recent changes in Apple privacy permissions that make it way harder to get accurate reporting.
But don’t be discouraged! We’re about to share our process to find YOUR small business’s unique social media ROI.
Keep reading for 5 easy steps you can take RIGHT NOW to plan your social media marketing budget in 2022.
STEP 1: Determine Your Social Media Priorities
What do you want? Which social media results are going to be most important for the growth of your business? This will tell you if your social media ROI is best tracked through hard data (numbers-quantitative) or your own qualitative observations. Or both, preferably!
- Do you want more followers and engagement?
- Improved brand and product recognition with your target market?
- More sales, leads, or email list signups?
Once you know your priorities, you’ll know what you need to do to track ROI and social media campaign performance. And how to track the effectiveness of your employee or social media agency.
Pick at least 3 target priorities for 2022. Write them down—you’re going to use these in Step 2!
STEP 2: Set SMART Social Media Goals
The ROI for social media tactics varies depending on your industry and business model. This is where a custom social media strategy plan comes in handy. Setting custom social media ROI goals helps you create benchmarks to measure YOUR progress because no two businesses are the same!
You might not reach your social media goals, especially if you are just starting out with social media. But it’s important to have SMART goals. This way, at the end of each week, month, quarter, or year, you can reflect upon what you need to do differently to improve your ROI.
What Is a SMART Goal?
A very common priority for growing businesses is getting more followers. But, how many followers do you ideally want to gain? And in what amount of time? Instead of “I want to grow on Instagram” try “I want 500 new followers per week in 2022. I want 2,000 total new followers per month. And I want 24,000 followers by the end of 2022.”
How will you measure success? How will you know if you’ve failed? Each goal must be measurable in quantitative way so that you can know what’s working and what’s NOT.
Can you realistically DO THE THING? I usually say the sky is the limit, but try to be realistic when defining your goals so you aren’t setting yourself up for failure.
Remember, while you may not actually get exactly 500 followers a week OR 2,000 followers per month, you COULD totally get 24,000 followers total in 2022. But having smaller, realistic goals to inform your efforts and help measure ROI is key to your success.
How will growing your social media and getting more followers help you sell more and grow your company? Each priority and goal should be one small part in your larger marketing strategy. If the goal does not help your small business, then why would you bust your butt to achieve it?
Give yourself a deadline! This will help keep you motivated and focused. Just make sure to have benchmarks along the way so you can measure progress and adjust your strategy if you aren’t seeing results.
Now that we’ve set SMART goals, let’s move on to Step 3!
STEP 3: Determine Your Total Investment
Make a list of all expenses related to your social media investment—including your time and the time of your employees.
The Hard Costs of Social Media Marketing
- Instagram, Facebook, LinkedIn, or Pinterest advertising spend
- Monthly social media management fees
- Development of your annual social media strategy plan
- Social media analytics, design, research, and scheduling tools
- Photoshoots and photography-related expenses
- Video creation and editing services
- Photo and video props and backdrops
- Equipment rentals, and location rentals
- Sponsored posts and influencer marketing fees
- Giveaways, contests, and other promotions
Time-Related Costs of Social Media Marketing
- Social media content production (creating posts)
- Engagement and building partnerships
- Managing a social media employee
- Staying up-to-date on social media trends
- Planning your yearly social media strategy
- Creating and optimizing social media ads
- Monitoring campaign performance for ROI
Quantify Time Spent
To make “time spend” more quantifiable as an investment, pay yourself and your salaried employees a reasonable wage for the time. The average social media manager makes around $51 per hour. To estimate the value of your time spent on social media, multiply the number of hours you spend by 51!
Once you have your total social media investment or your investment per channel, you’re ready to estimate your social media rewards…and then find your approximate social media ROI with hard data to back it up!
STEP 4: Proper Tracking and Total Rewards
This is always the hard part! To help you estimate how much reward your business sees from social media campaigns, make sure you have the proper tracking tools in place. There’s nothing like NUMBERS to validate your qualitative social media ROI findings!
Set up Google Analytics and Tag Manager
Collect data on how many customers, clients, or patients come to your website from social media and how many actually convert. This can include ads traffic from social media.
Additional analytics may be available through your social media scheduling software, like Hootsuite, Planoly, Later, or SproutSocial.
Use Campaign-specific Links
To get a more in-depth view of website traffic that originates from social media, use campaign-specific links. For instance, if you share a shortened link with tracking, you’ll know exactly which social media platform drove a client to your website. And which ad formats and organic posts are driving the MOST traffic.
This can help you optimize your content for better conversion AND give you a more accurate estimate of ROI for each campaign.
Ask Your Audience!
We also suggest asking customers and leads where they found out about your business. Most people are happy to share! Add social media as a lead source in your CRM or however you track sales.
With enough data, you can attribute sales and quantify the less obvious conversions you’ve made from social media. Social media ROI is a long play! They may have discovered your product or service on social media months or years before they become a customer, so sometimes the best way to know is simply to ask!
While the rewards of your social media campaigns can be hard to quantify, do your best to give them an estimated dollar amount. We’ll use this total to calculate our social media ROI in step 5!
STEP 5: Find Your Social Media ROI
There are two main formulas we usually use to understand social media ROI. You want to see positive returns from BOTH.
Time Spent vs. Overall Reward
Value Achieved ($)- Time Investment Made (hours you worked or your employees worked x $51) / Time Investment Made ($) x 100 = social media ROI (%)
If I made roughly $30,000 off of my social media in 2021 and I know I spent about 5 hours per week on social media, my math would look like this:
$50,000 – (52 weeks x $51=$27,348)=$22,652
$22,652 /$27,348 = .828
.828 x 100 = 82.8% social media ROI
Money Invested vs. Profit Generated
This formula may work better for you if you are currently paying an employee or agency to manage your social media.
Profit / Investment x 100 = social media ROI %
Profit: The money you have earned from your social media marketing efforts
Investment: The total cost of your social media marketing efforts
Understanding Your Social Media ROI
Analyzing the time and money you spent vs. the rewards and profit you got gives context. You may be seeing a ton of social media rewards. Yay!
BUT what if to get those rewards, you spend 24/7 on social? You’re not able to focus on business development or spend time with customers, clients, patients, family, and friends. So are you really seeing rewards proportionate to your work?
What if you are investing very little in social media marketing AND seeing very little return on investment?
While you may think that social media marketing “just doesn’t work” for your business, the problem is actually that you aren’t investing enough to be effective. You might need to reevaluate your budget or revise your tactics, and analyzing your social media ROI can give you this valuable info.
What If My ROI Sucks?
If you’re managing your social media yourself and you aren’t getting results, treat yourself exactly like you’d treat an employee. FIRE YOURSELF! Hire a professional social media strategist or social media agency to help get you back on track. Social media platforms are changing constantly, so it’s really a full-time job keeping up with trends and tactics!
The most affordable and impactful option for small business owners is social media strategy and planning. It helps you set up the framework for all social media efforts so you get maximum benefits for minimum effort.
Does your business have an internal marketing team but no social media expert? Do you need to train a new employee or social media intern? Or perhaps you just need a solid plan of attack and advice on where to invest your social media budget for best results. These are all things a social media consultant can help you figure out affordably!
How Can Social Media Strategy Improve ROI?
When you hire a strategist or consultant to help improve your social media ROI, you’ll get all of these benefits:
- set your priorities and goals for social media marketing in 2022
- develop a realistic posting and engagement schedule that you can maintain without stress
- help you set daily, weekly, and monthly goals to help you stay consistent and on-track
- explain social media metrics—which are most important and how to interpret them to measure success
- map out a plan for engaging with other accounts that gets you more followers and engagement on your posts
- use only the social platforms that will directly benefit your business and encourage sales and website traffic
- streamline your content creation process and create more valuable posts in less time through content batching
- optimize your profiles and posts with SEO keywords for better searchability and discoverability
- convert followers into customers and clients and make more sales on social media
- grow your following through engagement tactics, strategic posts, and by using all social media features
- develop content pillars to guide your content creation so each post has maximum value to your business
- develop post prompts to help you brainstorm an on-brand and effective social media post when you aren’t feeling inspired
- best use your social media ads budget to achieve your goals
- pretty much anything else strategy-related, including answering questions about the features of each social media platform
Get Social Media Help
If you’re struggling to improve your social media ROI and you know you need help, developing a solid annual social media strategy is always the first step. From there, you can also consider monthly social media management services, social media advertising management, and social media outreach to build partnerships and engagement.
We’re always here to help your small business with Instagram, Facebook, LinkedIn, TikTok, and Pinterest. We’ll help you set goals and achieve them through kickass images and videos, optimized captions, and quality engagement tactics.
Drop us a line! And make sure to check out our blog for tons of FREE social media education!