Can social media deliver ROI?
If you’re struggling to prove social media ROI to your boss, we totally get it. Measuring the return on social media metrics for the uninitiated can often feel like a guessing game, and not everything you do will result in bottom line sales.
Social media is a powerful tool for building relationships with customers - but relationships are difficult things to measure! Social media can also be used to help convey a brand’s personality and tone of voice, which can’t be measured either. So, what can we measure? There’s no doubt that social media is an important channel for marketing, but how do you prove your investment is paying off?
What is social media ROI?
ROI stands for “Return on Investment” and is not a one-size-fits-all affair. Normally when someone thinks ‘ROI’ their mind goes straight to revenue – but for social, as for other marketing activities, this may be not be the case – after all, you wouldn’t make a big purchase just off the back of one social post. While some brands may offer FMCG that might be bought instantly, other brands rely on social media more for ‘soft’ leads.
What these soft leads – and therefore ROI – means for your social media strategy is completely dependent on your overall business objectives - whether it’s brand awareness, customer service, or anything else that drives valuable action.
Your objectives represent what social media will help your business achieve. Once you have defined these objectives, you need to set goals to determine how and when you’re going to achieve them. Where possible, we recommend using the SMART framework for setting goals. This means making sure that your goals are Specific, Measurable, Attainable, Relevant, and Time-based – setting a specific number and deadline for achievement e.g. instead of just saying ‘drive leads on social’, a SMART goal would be ‘Drive five leads through social media every month’, or ‘Increase leads through social by 10% from Q1 to Q2’.
Why do I need to measure social media ROI?
Effectively measuring your social media ROI can help inform you on how to improve your future campaigns. It can help you determine how much value you’re delivering to an audience, as well as enabling you to prove that your investments are beneficial to the company. On the other hand - based on an analysis of your activities - if you find your ROI is low, it can help you pinpoint inefficiencies in your social media strategy so that you can start making improvements.
In short, ROI can help to change the perception of social media within your business by showing the contribution that it has on the entire organisation, not just marketing.
Measuring social media ROI
The easiest way to determine if you’re meeting your business objectives and goals is to define and use specific social media metrics.
There are multiple different metrics you can use depending on what goal you are looking to achieve. For social media, these can be broken down as below:
1. Consumption metrics
A lot of the traditional consumption metrics – which track how people respond and consume social media content – are considered ‘vanity metrics’. This might include post reach or impressions, number of followers, or the number of engagements (be they likes, comments or shares). However, if your goal is to increase brand awareness then these metrics are key: allowing you to benchmark yourself and track the health of your social presence.
2. Lead generation metrics
This may differ from company to company, depending on a brand’s marketing funnel and the number of steps until purchase. However, overall, the main metrics for lead generation will include traffic to your website through social, sign ups to forms, and even downloads of material.
3. Sales metrics
For companies who are looking to calculate ROI based on revenue, there are several sales metrics to use. As well as the number of sales made through social, you may also choose to count the number of assisted conversions (where social media was a touch point on the journey but the final decision was made later), or even the number of people who added things to a basket – even if the purchase was not finalised. Maybe people are keen to purchase when clicking from social, but something on the website stops them (a big delivery fee, for instance). Using different metrics will help you see this, and make sure the social ROI is calculated fairly.
You also need to be clear about the scope of your investment if you want to ascertain whether you’re getting a good return. Things like the cost of social media tools and platforms, ad spend and time spent by employees on social media also need to be taken into consideration when measuring your ROI.
If you’re not sure what to measure, look at what your audience did after seeing one of your social media campaigns and decide if this aligns with your objectives and goals or not.
Tools to measure social media ROI
Once you have a clear idea about your business objectives and goals, and what metrics you’re going to use to measure ROI, you’ll need the right tools to do it. Here are some of our favourites at Hydrogen:
Google Analytics: Helps to track website traffic, revenue, assisted conversions, and sign-ups from social media campaigns.
Facebook pixel: A piece of code for your website that allows you to track website visits, those who ‘add to basket’ and purchase
Google URL builder: This tool allows you to track important data about website visitors and traffic sources through any given campaign by adding campaign parameters to URLs.
Ways to improve social media ROI
To help improve your ROI, analyse your social performance. Research your top performing posts, when your audience tends to engage with you, whether videos receive more engagements than still images. You may even consider running A/B tests to see what works for you.
Want to find out more about social media and delivering a strong ROI? Get in touch with our team today to find out how we can help!