For marketing departments and agencies working with social channels, measuring social media ROI, or return on investment in social media initiatives is critical yet highly challenging. Even though not all benefits derived from social media efforts represent immediate financial gains, organizational stakeholders want to see the numbers—proof of revenue growth or significant business impact leading to eventual growth. Despite the fact that it isn’t always easy to determine the degree to which a campaign contributes to revenue gains or added value to a business, firms want to know that their social media strategies are paying off.
The importance of measuring social media ROI
Measuring social media ROI is one way of quantifying social media impact and evaluating the performance and efficiency of your efforts on social channels. By calculating your social media ROI, you can more easily:
Measure and benchmark the impact of ad campaigns, sponsorships, and other social media projects
Define and maintain the success of specific social media initiatives as well as of your everyday social media efforts
Show all stakeholders in the organization how much actual value is being generated from social media spending
Make smarter decisions about future investments in specific channels or audiences, content types, and influencers
Best practices for measuring social media ROI
The first step in measuring your social media ROI will be to define what your goals are for your social media campaign. Is your priority to increase brand awareness? Or improve brand reputation? To attract more traffic to your website? Or boost online sales?
The next step is to establish social media KPIs that you can use to focus on social media monitoring efforts and measure your progress in meeting your goals. Your KPIs help you collect and analyze the social media data necessary for measuring social media ROI. You can then use web analytics tools, social networking services’ built-in analytics tools, or more sophisticated social listening toolsets to track the relevant KPIs.
You will also need to track your spending on social media, focusing on a specific period of time and/or campaign, and calculate or estimate how much-added value is being produced for your business as a result of those expenditures. Some KPIs will provide you with a dollar amount while others are more abstract. For the latter, you will have to assign approximate monetary values based on historical data and the lifetime value of the customer to calculate social media ROI.
Useful KPIs for measuring social media ROI
Here are just three examples of KPIs that are supported by Synthesio’s Social Intelligence Suite, a collection of robust social listening tools, that make measuring social media ROI simpler:
Media Value: A measure that factors the average Cost-Per-Click of paid social advertising by the Total # of Interactions (likes, retweets, and shares) generated by a specific topic. This KPI can help you determine the monetary value provided by sponsorships and social media campaigns.
Share of Voice: This is a measure of the percentage of mentions a brand receives around a certain topic or within an industry. This KPI shows you how much buzz is being generated about your company, product, or service.
Social Reputation Score: This is a proprietary Synthesio metric based on an algorithm calculating the overall volume and sentiment of mentions a brand, product, or topic is receiving online.
Measuring social media ROI with Synthesio Beam
Powered by the best social analytics engine on the market, Synthesio Beam for Social Media Command Centers is an innovative solution offering you customizable dashboards that display the social media KPIs most relevant for your brand. Intuitive visualizations make it easy for you to monitor and assess brand health, campaign impact, and your social ROI. Beam lets you see in real-time your mentions, Social Reputation Score, and other critical metrics that enable you to act proactively to improve the performance of your social media campaigns and sponsorships, manage your online reputation, and stay one step ahead of your competitors.
Social Media Intelligence Guide: Strategies for 8 Different Use Cases
ROI, an acronym for Return on Investment, is used to gauge the efficiency or profitability of an investment, strategy, or business. ROI is a performance measurement that can be expressed as a percentage or a ratio and allows investors to calculate and compare the profitability of existing and potential investments, thereby enabling smarter, strategic decision making.
What does ROI mean in social media?Carmen Yeung2020-02-12T11:35:02-05:00
As a performance measurement, ROI can be used to evaluate the profitability or success of a firm’s investments in social media. By measuring social media ROI, teams can objectively assess the impact of social media campaigns and sponsorships, provide evidence of the success of social media initiatives, justify expenditures on social channels, and find the most efficient way to obtain the most value from social media efforts.
What is a good ROI ratio?Carmen Yeung2020-10-13T11:34:52-04:00
Put simply, the higher the ROI, the better—the better the return on your investment. What is considered a good ROI ratio, however, will differ depending on one’s cost structure, industry, and the current market demand for your product or service. There simply isn’t a golden ROI ratio for all use cases.