Experts constantly tell us how great social media is so I won’t bore you by further reinforcing how maintaining a social media presence will drive traffic, boost your SEO, and maximize your return on investment (ROI). Unfortunately, the process of translating all the benefits of social media marketing into actual numbers isn’t as straightforward as measuring the effectiveness of something like a Google AdWords campaign.
Social ROI should be straightforward, don’t you agree? However, many studies show that social marketers consistently identify the top challenge of their job as measuring ROI. It is a top challenge but critical to success and therefore cannot be ignored. How do social marketers link social activities to conversions that the higher-ups care about? How to prove that social ROI is a question that I am here today to help answer.
But first, what do I mean when I say “social ROI”?
Social ROI refers to the financial impact of social media marketing. Social marketers are asked to track their activities on social (from scheduling #marketingMonday posts on Facebook to running paid LinkedIn ads and everything in between) and tie them back to traditional business goals. You put in all this time, money, and resources, so what is your company getting back?
Why is social ROI so important?
Want execs to be on board with your marketing efforts? Need your budget approved? Then demonstrate how you are contributing to the bigger business goals and show how your social media tactics are paying off.
These days, marketing is measured against its ability to contribute to the bottom line. Some businesses focus on social media marketing because they think they ‘have to.’ I agree, everyone should be active on social. But! there’s no point unless you’re also tracking your activity and have a strategy (with goals and objectives) in place. If you’re not tracking and analyzing your social efforts, you won’t know if what you’re doing is working. Additionally, you need to measure your social ROI because you’ll see where you can make adjustments and improvements, be able to decipher which social channels are bringing in revenue, and be able to see how changes impact your goals.
Measuring and proving ROI also impacts the success of a marketing agency and influences future budgets. There is an undeniable connection between ROI and budget; in HubSpot’s 2016 State of Inbound report, it was reported that those who are able to calculate ROI are 1.6x more likely to receive a higher budget. Additionally, those who do calculate ROI are more confident when it comes to verifying the success of their marketing efforts.
An inability to measure ROI will prove to be a roadblock for marketing teams trying to show their value or advocate for higher budgets. Makes sense, right? If you can’t show undoubtedly that the time and money you spend on social marketing doesn’t yield results, no one is going to want to give you more money to play around with.
Social ROI challenges
Marketers keep on spending money on social campaigns. But they also continue to struggle to accurately measure the return they get. What gives? If you’re going to pour money into social media you’d expect to know how it converts into business revenue. If you are utilizing pay-to-pay platforms like Facebook (and to some degree Snapchat and Instagram) it’s even more important to be able determine social ROI.
One key challenge? Marketers really like their proxy metrics – the vanity or engagement stats such as video views, likes, comments, shares, or retweets. For a long time now, engagement metrics are what marketers use to measure the success of a specific social campaign. And that is hard to move away from. It certainly was for me, initially. Social platforms (I’m talking Twitter, Facebook, LinkedIn…) make it so easy to report on these types of metrics! But if you want to prove your social ROI you need to look at a few other things, as well.
Not all metrics to measure success are created equal. Measuring data is a key factor in determining success. The good news is that data is easily accessible. The only kind-of-bad news is that it can be difficult to know which data to focus on. Metrics such as website traffic, conversion (which can be set up in Analytics), and revenue all help measure success.
Steps for measuring social ROI
Even if you’re seeing positive engagement – clicks, downloads, likes, etc. – how do you turn these points of contact into dollars? In a nutshell, you will need to set goals, track campaigns and conversions, measure the benefits, then analyze and improve.
1. Know what you want to achieve. Then choose the metrics that will measure those goals.
Before you can measure your return, you must set quantifiable, specific goals. Do you want to know how many people signed up for your email list? Maybe you have an e-book or white paper circulating and want to know how many people have downloaded it. Social shares and number of followers are pretty metrics but they shouldn’t be the main objective (more on this later.)
If your goal is to raise brand awareness, you need to look at your social media reach and engagement.
If your objective is making sales, you need to measure landing page clicks, CPC, and cost per conversion.
The challenge here is that not every social network gives you the data you need. Ugh, more work? Yep. For marketers, platforms that don’t share a lot of data limits their value. Determine which platform is right for your social media goals.
2. Set benchmarks so you have something to measure outcomes against.
You’ve got defined goals and social campaigns, now track your conversions! Month-over-month, how are you comparing to competitors? Track your data and use an analytics platform (i.e. Google Analytics) to get it done more easily and quickly. I can do a deeper dive into Analytics if anyone is interested, but to get started with setting social conversions go to you dashboard, then Acquisition -> Social -> Conversions.
The second part of measuring your goals is assigning monetary value to conversions. This often takes into account lifetime value and average conversion rate. Analytics can help you determine goal values.
3. Figure out how much you are spending.
Okay, you’ve got clear objectives and data, but how do you show executives the numbers they want to see? By tracking your expenses. How many hours were spent on a specific social marketing campaign? What was the hourly rate? How much did you pay someone to create graphics or a landing page? Include the cost of running any paid campaigns, such as a Facebook Ad or Promoted Tweet. Don’t forget to factor in the price of using management softwares.
Once you have the costs for an individual campaign added up, compare that to the earnings. Be sure to measure the total benefits by channel so you can weed out which work and which do not. Determine the total costs and compare that to the earnings.
4. Communicate your value and report on your findings.
Make sure the higher ups understand how social works – what it is and isn’t intended for. No matter how strong your data is, if there’s a fundamental lack of understanding when it comes to the value social can deliver then they will take issue with said data.
Finally, analyze your results and improve your campaigns. If a social network or a particular campaign is netting negative ROI, make adjustments. Don’t forget, there are plenty of indirect benefits to social marketing, like trust building and brand awareness! Be sure to account for these when communicating your value. There isn’t always a dollar amount tied to social ROI, but all of activity impacts it.
Which tools to use
Marketers need to agree to stop being so invested in analytics tools that only measure engagement. Get yourself a tool that is capable of tracking conversions! A lovely and free one = Google Analytics. With Analytics you can track website traffic, on-site conversions, and other social media campaign goals.
Another free and easy tool to have in your marketing arsenal: UTM tracking. Add UTM parameters to your social links to help measure and prove the value of your social efforts. You can specify short codes for campaign name, source, medium, term, and content. These track important data about website visitors and traffic sources, giving a detailed view of your social success. The data from UTM tracking provides a sense of the cost of acquiring a lead and cost involved to acquire a customer. Go here to get started with Google URL builder.
And then I’d be remiss if I didn’t point out the not-free tools at your disposal. Management softwares such as Sprout Social, Hootsuite, HubSpot, and Buffer are powerful marketing tools for business. Using the right tool to set up conversion goals, track consumer actions, analyze all the data and report the awesome results is very important.
One thing we know for sure? Inbound marketing campaigns consistently deliver ROI. Learn more by downloading our free report: