Is there an ROI from Social Media Marketing?

Is there an ROI from Social Media Marketing?

Is there an ROI from Social Media Marketing?

Marketers are investing significantly more in social media efforts, with increases to almost 50% percent of marketing budgets expected within five years. With vast benefits such as increased exposure, web traffic, and lead generations it is important to invest in the ever-growing industry that is social media. 

Marketers understand that you must make an investment to deliver social media results and success, but what spending levels are required, and how much effort needs to be expended to deliver specific results? 

As social media marketing efforts increase, so does the investment required. And in today's age, every significant investment now requires proof of bottom-line impact and superior value - a condition called Frugalnomics. As a result, with the social media spending increases, comes:

  • Increased executive scrutiny, 
  • Challenges from other stakeholders who may be losing budget to these efforts. 

This is driving the need for better social media measurement and return on investment (ROI) accountability.

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How do you create ROI for social media marketing?

Calculate how much you spend on social media advertising

This would include the cost of the platform and tools used for managing your social media accounts

  • Social media ad budget
  • Cost of creating content- this could include any cost incurred by outsourcing the work to freelancers or content creators
  • Overhead expenses of running your social media team
  • Agency/consultant costs

Define clear objectives

There are multiple objectives you can achieve by running ads on social media channels. These include:

  • Conversion campaigns to generate leads
  • Brand awareness campaigns
  • Increase engagement
  • Building community and improving customer service

These objectives in turn will ensure that your company will experience more employee satisfaction levels, and partner and supplier confidence. 

Track metrics

You can track the following metrics to assess the success of your social media campaigns:

  • Reach
  • Audience engagement
  • Site traffic
  • Lead generation
  • Sign-ups/conversions
  • Revenue generated

The next step is to assess how your customers respond to your ads. Keep a keen eye on target audience behavior tendencies after exposure to the ad campaign and understand how that aligns with your bigger business goals. Now, do you have the capacity to measure this parameter?

Measure ad returns over a period of time preferably with your sales cycles to allow for an appropriate timeframe for reporting results. 

Create reports

Using KPIs to track long-term progress, create analytical reports to understand the data you have gathered from your social media ad campaigns. This will help you understand an unsuccessful campaign from a successful one and help guide what types of ad campaigns are viable for your company. Marketing automation software can help streamline this process. 

Calculating ROI

The simple equation for calculating social media ad campaign ROI is

(Earnings-Investment made) x 100/ investment made= social media ROI

For example, let’s say you spent $300 on an ad campaign that generated $1200 in revenue would bare an ROI of 300 as displayed below:

(1200-300) x 100/300= 300

Calculate this number using results for each individual platform ad campaigns were run on and assess the ROI for different platforms to understand which social media platform may be the most lucrative platform for your business. 

Which social media platform has the best ROI?

According to data gathered in November 2021 by Statista, Facebook (Meta) continues to be the dominant social media platform for advertising with a market share of 21% while their fellow company Instagram holds 18% of the market. LinkedIn comes in at 14%, with TikTok at 12% and YouTube at 11%

Tips for increasing social media ROI

  • Optimize target audience

Using your social media management tools, decipher audience segmentation data and run targeted campaigns for relevant audiences. Also, be sure to pay attention to user behavior on different social media platforms to target different audiences through different social media platforms. 

  • Customer feedback

Social media is a great platform to source customer feedback. Using your existing audience to leverage data about customer trends, and preferences, and answering their questions might help your company reach similar new audiences. 

Social media can also function as an extension of your brand’s customer service approach. Listen to customer complaints and understand how you can improve your business to better service existing customers.

  • Directly link to an e-commerce site

Social media has become a highly discoverable medium for brands. Younger generations are more likely to look up your company via social media channels rather than googling. Hence, it is highly advisable to maintain a great social media presence. 

You can use this level of exposure to attract more site traffic by simply linking your social media channels with your e-commerce site. With the new ‘shop’ feature offered by the most popular social media channels, you can directly link products from your social media to your site to further increase website sales conversions. 

  • Stay true to your brand goal

Your customers were drawn to your brand for a reason, and it is important to maintain the level of trust held by your brand. It may be tempting to jump on every new viral social media trend that you might see, but it is important to mind how these trends align with your overall brand goals and vision. If a consumer were to see your company promoting a product using an offensive trendy marketing tactic, you’re more likely to alienate your audience than to attract newer eyes. 

Having content focused on your brand message will help maintain your existing customer base and also attract new similar consumers. 

At the end of the day, social media should be considered another extension of your company’s marketing strategy and it is important to understand the ROI of your marketing investment. Social media channels are able to give consumers a quick peek at your brand and depending on how well your social media profiles are managed, you may gain or lose new clients. 

Hence, it is important to be mindful of your brand’s target audience and stay on track with your brand’s overall goals and vision to build a lasting and meaningful relationship with consumers. If these factors are in check, your social media ad campaigns are sure to be successful and give your company the desired ROI and exceed it!





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