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.

Continuous growth

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

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

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

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.

Inadequate budget

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.

Final thoughts

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.

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