How to Measure Social Media ROI

Using social media to market your business is something every business should do; however, despite what some may think, social media is not free. There’s at least a minimum investment that you have to make, even if it’s just your time, existing knowledge, and ability. When there’s an investment in the business, it becomes necessary to measure the return you’re getting on that investment, your ROI.
But how do you measure the ROI of social media? Well, the math is the same as any other ROI calculation:
The math, the calculation, is easy. Defining “return” and “investment” are the hard parts. Here are 7 variables to consider when measuring, proving, and defending the ROI on your social media investment.
What content will you be sharing via your social media channels? Kabbage, the largest online small business lender, recommends, “First and foremost, you should have a blog on your site where you create compelling content.” Buffer, the social media sharing software tool maker,
Buffer, the social media sharing software tool maker, backed up Kabbage’s statement with this: “Ninety percent of our social media updates are based on content we’ve written on the blog.” OK, so you’ll need a blog, which will cost something – usually someone’s time – to set up, and then someone must create regular compelling content for that blog, either an employee, freelance writer, or an agency. Content is an investment.
What social media channels will you use to share this content? You may have to do some research to determine where your target audience is, and they may be on more than one social channel. The research to learn this fact will take someone’s time. There’s another investment.
Every organization has goals, and the goals for social media should flow from within the organization’s goals and brand. If you have goals, that means you’re doing this particular exercise for a reason, and that reason is not just “so we’ll be present on social media.” Your goals for social media should support the organization’s business goals, which are usually focused on revenue, costs, brand, and product. If you don’t have goals, then you really need to ask yourself why you are being paid to handle social media for your company. You are an investment.
If you don’t track it, you can’t measure it. If you don’t measure it, you cannot manage or change it, which is to say you cannot improve it. To track social media, by which I mean track how your social media followers are interacting with your content, you should use Google URL Builder and some form of URL shortener (,,, etc., or a custom URL shortener). Google URL Builder enables you to use UTM parameters to perfectly and clearly identify exactly where the link was and why it was there when your audience clicked it and where your audience landed when they clicked on your URL. You’ll need to store these URLs in a simple spreadsheet or in your CRM for each campaign.
Each campaign should have its own ROI. Measuring involves tracking each campaign from conception to completion, from blog content to social media post to click through to lead generation to customer conversion to revenue. Each campaign should be tracked all the way through the marketing funnel or the AARRR processGoogle Analytics is free, but it will take time to learn and master, and it will cost you something – time, favors, or money – to get your website properly setup to track and measure every engagement in every campaign within Google Analytics. Tools likeBuffer enable you to automatically add campaign tracking to every post.
Over time, you will be able to establish and assign a value to each social media interaction, such as a follower on Twitter. For example, if you have 1,000 followers, and you send out a tweet with a clear call to action (CTA), you will earn a certain amount of impressions organically for that tweet. Some percentage of your audience will click on your CTA. Some percentage who clicked on the CTA will become leads, and some leads will convert into sales. The math (from this example) is easy: the value of a follower is derived by dividing the revenue from a specific campaign by the number of followers. This is a simple example, but it works for establishing a basic value of one follower. In other words, that value is the most you should be willing to pay to earn one follower if you invest in a paid ad on Twitter to boost followers.
Measure the revenue that can be attributed to leads generated by this specific campaign, which you tracked via your long UTM parameter URL that you built with the Google URL builder, which were then captured by your CRM, from which you can run a simple report that shows total conversions and revenue. This is your return and you should measure it for each individual campaign.
Or “investment” since we’re talking “ROI”. You must know your costs, which include everything above (except revenue), and including “value” if you invested in any social media ads to boost fans and follower numbers. Be transparent in your organization about which costs you are including in your calculation, and make sure you get complete buy-in, so you’re not sandbagging but also not being too conservative in your numbers.
Do you have all these things? Good! Now you’re ready to do that simple math:
Warning: you should only calculate your ROI on social media investment if you want to get a larger budget for next year, because when done right, social media driven by compelling content will win.

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