Social Media ROI: How to Measure Your Social Marketing

When measuring the return on your social media program you need to be measuring your success at each stage of the customer journey to determine when and why your customers are making purchasing decisions.

ROI Requires a Monetary Goal:

ROI is a hot word that you will hear being used in many boardrooms. What does it actually mean? ROI is not relevant if you are not making comparisons; for example, measuring the return on your Facebook advertising vs your Google Ad spend. ROIs need to be connected to a value to be useful, some situations may not be suitable for even considering ROI.

Making Sense of the Data to Calculate ROI:

Social media networks would have no value if there weren't enough people using them. For there to be an interaction you need to have more than one person. This is true for any social network, from the most common such as Facebook to the least known like GitHub. It is easy to track vanity metrics such as likes, follow, and shares, but that becomes a little harder on obscure networks. At the end of the day, marketers need to get very good at measuring results to understand what their social marketing is doing.

Return on Ad Spend Doesn’t Equate to ROI:

People sometimes confuse ROAS with ROIs but they are quite different. ROAS is a simple equation, your earnings divided by your spending, whereas ROI takes into account the cost of earning. This is an important thing to note – if you are disregarding the cost to get the end result you may be less successful than you think. If you are going to focus on ROAS you should never go below 400% meaning for every $1 you spend you should get a $4 return.

Determining Overhead Costs:

Businesses underestimate all the hidden costs of marketing. Your ad spend is only one aspect of your advertising spend, human resources is a much larger factor than you think. When you add in the cost of human capital into your social media programs your ROI may be much less than you expected. Sometimes it is more cost-effective to hire an agency than employ a person for a particular duty. Which solution will make you the most money is important.

Attribution Models for Earned Social Media:

An attribution model determines how credit for sales and conversions is assigned to touchpoints in conversion paths. They are the best way to measure the impact of your social media marketing and add value to the channels that generate new business. Google Analytics has five attribution models to show at which stage a conversion occurred: first touch, last touch, linear, time decay, and model-based or position-based. You need to choose the best attribution model for your business or you will not be mapping the customer journey properly.

Now, does this help understand how best to manage the ROI and ROAS on your social media campaigns?