How to Measure Social Media ROI and Optimise Your Campaigns
- Calculate ROI: ((Revenue – Cost) / Cost) x 100
- The most significant barriers to understanding social media ROI are unclear objectives, lack of analytics tools, and ever-changing trends.
- Optimise your social media campaigns by engaging with user-generated content, experimenting with different content formats, and incorporating data into all your decisions.
Social media is a popular marketing channel because it can help businesses reach large and diverse audiences, build brand loyalty and awareness, and engage with leads in real time. Social media also provides valuable data and insights into customer preferences and behaviour, which can be used to inform product development and future marketing efforts.
Since achievements like increased reach, loyalty, and awareness aren’t as tangible as sales, businesses can sometimes have trouble quantifying the value of their efforts. Therefore, they might struggle to measure and understand the ROI they’ve obtained from their social media campaigns.
Without an awareness of the financial impact of their actions, marketing teams and businesses can never be sure of exactly how successful their campaigns are and, therefore, what to change next time.
Other barriers to understanding and boosting social media ROI include vague goals and objectives, lack of analytics tools, and constantly evolving trends.
To help your business measure the ROI of its social media campaigns, we’ve devised a detailed guide so that you can get to know your efforts more intimately and ultimately optimise them for maximum results.
What is social media return on investment (ROI)?
Social media ROI is a measurement of the efficacy of social media marketing campaigns in terms of generating revenue or achieving specific business goals. ROI refers to the ratio between the profit or benefit gained from an investment and the cost of that investment.
How to calculate ROI
The first aspect of working out ROI is calculating the cost of your social media campaign. This figure is comprised of everything you’ve spent, from the cost of your tools and software, paid advertising channels, content creation, external agencies, and your in-house marketing team.
Next, it’s time to calculate your generated revenue. This figure is calculated by adding the revenue generated from both direct sales and referral traffic.
Calculate the ROI of your social media campaigns with the following formula:
ROI% = ((Revenue – Cost) / Cost) x 100
For example, if you spent £1,000 on a social media campaign and generated £2,000 in revenue, your ROI would be:
ROI% = ((£2,000 – £1,000) / £1,000 = 1) x 100 = 100% return
How do I quantify non-monetary achievements?
Calculating social media ROI is a crucial part of understanding the success of your social media marketing campaigns. However, it’s not always as straightforward as in the example above. Since something like increased brand awareness doesn’t directly result in financial gain, assigning a monetary value to it is difficult. For this reason, many businesses struggle to quantify the achievements of their campaigns.
In the case of brand awareness, businesses should establish clear and correlated metrics such as social media followers, mentions, and website traffic. After the campaign ends, the value of this traffic or followers can be estimated based on their likelihood to convert into customers in the future.
Assigning a monetary value to social media metrics is not an exact science, and there are many variables to consider. For instance, not all followers are made equal, and their customer lifetime value will vary depending on industry and demographic.
Ultimately, businesses must hold these non-monetary achievements lightly and use competitor research to double-check their figures.
Why should I monitor the ROI of my social media campaigns?
Justifies the use of resources
Social media campaigns require significant investment in terms of time, effort, and money. Measuring ROI helps companies justify the expenditure and understand if these resources are being used effectively.
Identifies areas for improvement
Measuring ROI helps companies identify which campaigns are most effective and which aren’t. This information allows them to focus on campaigns that generate the best ROI and improve or discontinue campaigns that perform poorly.
Facilitates better decision-making
Measuring ROI provides companies with data that can inform decisions about future campaigns. By understanding which campaigns generate the best ROI, companies can make better decisions about where to allocate resources in the future.
Gather support from stakeholders and investors
When stakeholders have invested in companies, measuring ROI is essential to demonstrate the positive impact of their investments. It also helps to build credibility and support for future initiatives.
Measuring ROI is an ongoing process that allows companies to improve their social media campaigns continuously. Through data-informed decisions, support from investors, and a deeper understanding of online consumer behaviour, businesses can constantly improve and grow.
Why is my ROI so low?
It’s always disappointing when a campaign doesn’t meet your expectations. However, finding out what’s causing it to perform so poorly is crucial to improving for next time. Your low ROI could be caused by one of the following reasons:
Lack of clear objectives
Without clear objectives, it’s challenging to determine what success looks like or what metrics to track. If the goal of your campaign hasn’t been clearly defined, you won’t know whether to measure engagement rate, website traffic, or conversion rate. With no clear goal to measure against, you won’t be able to determine whether the campaign has succeeded.
Additionally, unclear objectives can lead to confusing or incomplete data, making it harder to draw definitive conclusions about your campaign’s impact. They can also confuse the team responsible for executing the campaign, wasting time and resources.
Poor targeting can lead to a range of issues, from inefficient spending, ineffective messaging, lower engagement rates, and fewer conversions. If you’re targeting the wrong audience or targeting too broad an audience, your message won’t resonate with the people who are most likely to convert, and you’ll have an immeasurable number of wasted impressions.
If a campaign targets the wrong demographic, the data collected probably won’t accurately reflect the behaviour of the intended audience, rendering it unusable.
Low engagement on your social media posts can indicate that your content isn’t resonating with your audience, resulting in lower click-through rates and fewer conversions.
If your campaign’s messaging isn’t compelling enough or the value proposition isn’t attractive enough, you’re likely to see low engagement rates and a low ROI.
Inconsistent messaging can confuse your audience and dilute the impact of your campaign, leading to low ROI. This is because conflicting messages can prevent users from understanding the brand’s story, personality, and value proposition – they might not even recognise the brand if they see it again!
Confused messaging can also appear unprofessional, which risks the brand’s reputation.
Poor quality content
If your content is low quality, it won’t capture your audience’s attention or resonate with them, resulting in low engagement and low ROI. Poorly created content can also damage a brand’s reputation, branding it as irrelevant, unprofessional, or of low value. Since content is how brands communicate with potential customers, it can result in low trust and loyalty if poorly executed.
Furthermore, social media platforms value and prioritise high-quality content. As a result, your content might suffer in the algorithms and fail to reach a sufficient number of users.
When the budget for a social media campaign is inadequate, it may limit the brand’s ability to run the campaign for a sufficient period of time to generate meaningful results, limit the brand’s ability to produce high-quality content, or restrict their ability to invest in the necessary resources and tools to optimise the campaign’s performance.
Social media platforms offer a range of advertising options, including sponsored posts, targeted ads, and promoted tweets. These options often require an investment to effectively reach the intended audience and generate a business’s desired level of engagement.
If you’re not investing enough in your social media campaign, you may not be able to reach enough of your target audience and therefore generate engagement and conversions.
Ineffective call-to-actions (CTAs)
Effective CTAs are crucial as they prompt users to take specific actions, such as clicking a link, filling out a form, or finalising a purchase. CTAs that fail to convey a sense of urgency or motivate users won’t generate a high ROI because they’re just not compelling enough.
If any of these issues are affecting your campaign results, you’ll need to make some changes. Read on to learn what you can do to optimise your social media campaign for maximum ROI.
How do I optimise my social media campaigns for maximum ROI?
The following best practices will help you measure and optimise the ROI of your social media campaigns from start to finish:
1. Outline clear objectives
Figure out what you really want your social media campaigns to achieve. Are you a new business wanting to get your name out there and generate brand awareness? If so, your objective might be to increase your page’s number of followers or to generate a certain number of impressions or engagements.
On the other hand, if you want to attract more leads and conversions to clear ageing stock, your objective might be to increase website traffic, leads, or sales.
Clear objectives will inform your use of analytics tools, your approach to audience targeting, and your content itself. Use the acronym ‘SMART’ to remember how to create effective objectives. ‘SMART’ stands for specific, measurable, achievable, relevant, and time-bound.
2. Define your target audience
Know key demographic factors about your audience, including their age, gender, interests, and behaviours. This will help you tailor your content and messaging to their preferences. You can use social media analytics tools to gain audience insights, such as what kind of content they engage with most.
You can define your target audience by analysing your current customer base, conducting market research, analysing competitors, and creating buyer personas.
3. Optimise your visual content
Your visual content is everything on social media. It’s the main thing users will see – so it’s got to be compelling. Ensure your images and videos are high quality, as these will express a professional brand identity. All visual elements should be optimised for mobile use, as most users access social media via mobile devices (this includes ensuring text is not too small to read).
Make sure that your images and graphics are not just eye-catching but also memorable. If you can incorporate branding into your visual elements, you’ll have a much better chance of reinforcing brand recognition and increasing engagement.
4. Optimise your CTAs and UX design
UX designers are trained to create user-friendly, effective designs that drive engagement and conversions. Their expertise could be what your brand needs to boost its social media ROI.
Using a data-driven approach, a UX designer can help you optimise all your marketing materials, including your use of CTAs. With audience research, colour theory, journey mapping, and current trends, a UX designer can ensure your social media posts are as attractive and compelling as possible.
If the design of your social media posts is to blame for low ROI, the cost of hiring a UX designer is likely to be justifiable.
5. Be consistent
Consistency is vital to building engagement and increasing your reach on social media channels. With that in mind, make sure that you post regularly and at the optimal time for your target audience.
Don’t forget that consistency is also important in terms of your design choices. If these are muddled, your brand won’t be memorable.
6. Engage with your audience
To show your audience that you value their feedback and opinions, make sure to respond to comments, messages, and reviews promptly. You can even encourage feedback and engagement in your posts, e.g., with Instagram polls and contests.
Sharing user-generated content is a great way to build social proof while appreciating your audience’s engagement. All these methods have the benefit of raising engagement, awareness, and reputation, which can result in a boosted ROI.
7. Use paid advertising
Paid advertising is an extremely effective way to boost the ROI of your social media campaigns. It can help you reach lots of users, as well as the ideal audience for your products, through targeting methods. In turn, this can drive traffic to your website and increase conversions.
Many paid advertising methods allow you to set a budget and only pay for the clicks or impressions your campaign receives. In this way, it can be extremely cost-effective and help you keep to your budget, thus preventing your ROI from dropping.
8. Monitor, measure, and analyse your results
Social media analytics tools can make a big difference in tracking your metrics and identifying areas where you can improve your campaign. The first thing you need to know about using data insights is having clearly defined goals and KPIs – which we covered in the first part of this section.
Next, you need to set up your analytics tools – whether you use Google Analytics, Facebook Insights, or Twitter Analytics. You’ll need to create tracking codes so that your tools can collect data correctly.
Your insights aren’t valuable to you unless you use them. So, carve out time in your schedule to analyse the collected data. Identify trends, patterns, and insights that can help you make informed decisions. Always make sure you’re tracking your ROI (whatever you have deemed a satisfactory ‘return’) and see how it impacts your bottom line.
When it comes to using insights to improve your campaigns, A/B (or split) testing is a great way to determine which changes will definitely be effective. So, this could be something you incorporate to boost ROI.
In terms of monitoring your social media campaigns, your business could boost ROI with the help of social media listening and sentiment analysis. These related techniques help you understand how people are responding to your brand by analysing mentions of it on social media platforms.
9. Experiment with different content formats
Experimenting with different types of content, such as images, text-based posts, videos, blog posts, infographics, podcasts, stories, live streams, and polls, can help you identify what resonates best with your audience. Plus, this variety can help keep your content fresh and, therefore, continually engaging to users.
Having a range of content formats can also help you reach a larger audience that you may not have reached with a simpler posting schedule.
10. Collaborate with influencers
Partnering with influencers in your industry or niche leverages their established audience and credibility so that you can reach more users in your target market. Plus, since influencers are experts at creating engaging and authentic content, you’ll have even more content to post on your own pages.
Make sure you identify influencers who are relevant to your niche and align with your brand values. You’ll need to draw up a contract that outlines the terms of content ownership, compensation, and any legal requirements. Be sure to lay out your expectations so that both parties are satisfied with the arrangement.
Top social media best practices for 2023
All things digital will be a little different in 2023, so it will be important to tailor your social media campaigns to adapt to upcoming changes. All the best practices listed above will positively impact your campaigns, but it will be crucial to prioritise the following three in 2023:
- A growing importance for mobile friendliness.
- Videos and short-form content are rising in popularity.
- An increased need for businesses to engage with user-generated content (UGC).
If your business incorporates just a few of these social media best practices, it’ll be on its way to boosting that all-important ROI. Remember to always support your strategy with data-driven decisions and improve on weaknesses when you spot them.
Here at purpleplanet, we understand that social media is different for every business. That’s why we offer several purplewave social media management plans. Our team of experts will work to develop a strategy that resonates with your target audience and support your campaigns all the way through, from start to finish.
If you want to strengthen your campaigns and drive up your ROI, get in touch now for help from the purpleplanet team.