social media ROI illustration
Social media has become an essential digital marketing channel for brands, with consumers, brands and businesses spending more time and money on social media than ever before. Brands can reach new customers and loyal customers through their social media channels, but how do you know if the investment in your social media strategy is paying off?

What is Social Media ROI?

The value of social media ROI for your business is the revenue generated by your presence on social media.

Social media ROI is the result of the following:

  • Brand awareness.
  • Increased sales and conversions.
  • Decreased customer service costs.

Here are three questions to consider when measuring your social media ROI:

  • How long will you be measuring your ROI?
  • How will you measure it?
  • And what (if any) benchmarks will you use as success indicators?

Why measure your social media ROI (Return on Investment)?

The answer is simple: To prove that your social media marketing efforts are worth it and are paying off.

Social media ROI is significant because it helps measure or track the value of your social media marketing efforts.

Any business owner or manager must clearly understand where marketing money is going and what they’re getting from it.

It allows you to make informed decisions about your resources and budget. By measuring your social media ROI, you can easily see where your efforts lead and make more informed decisions about where to focus your time and energy next. Thus, it helps justify future investments in social media work.

Use the Right ROI Metrics to Measure your Social Media.

Your social media ROI can be calculated using either direct or indirect metrics.

1) Direct metrics are directly related to your business goals and objectives.

For example, if you’re using social media to generate more sales, then your direct metrics will include things like:

  • The number of new leads generated.
  • The average size of sales made by each new lead.
  • Several repeat customers were generated.

2) Indirect metrics are more challenging to measure because they don’t directly relate to your business goals and objectives.

For example, if you’re using social media like Twitter for customer service and engagement, then indirect metrics might include things like:

  • Several customer complaints were received and resolved through social media channels.
  • Several positive comments were received from customers about their experience with you or your brand on social media
  • channels.

Here are some of the most popular metrics to track when evaluating the ROI of your efforts:

Pageviews: The number of times your page has been viewed on Facebook, Instagram or Twitter, for example. This will show how much activity takes place on your page or group and how many people engage with your content.

Engagement Rate: The percentage of users who have clicked on, liked or commented on a post. A high engagement rate shows that people care about what content you’re posting and want to engage with it further.

Conversion Rate: The number of people who have taken action after seeing your ad or post (examples include making a purchase or signing up for a newsletter). Conversion rates should be tracked over time so that you can see whether they’re increasing or decreasing over time.

Calculating social media return on investment (ROI)

The most common way to calculate the ROI for a given channel is by using “cost per acquisition” (CPA). This approach measures how much it costs to acquire customers through that channel and compares it against revenue generated from those customers.

For example, if it costs £10 in advertising spend per new customer accepted through Facebook ads, but each customer pays £100 per year for your product or service, then Facebook ads would have a 10x CPA.

This means that for the pound you spend advertising on Facebook, you generate £10 in revenue.

The ROI of your social media efforts shouldn’t be limited to sales and conversions.

You also need to track brand awareness, especially if you’re a B2B company and customer service cost, especially if you are a B2C company.
Brand Awareness

How does brand awareness affect ROI?

Brand awareness is what you need to get new customers and build your client base, which in turn leads to more sales, conversions and profits for your company.

Brand awareness differs from brand recognition because it refers to how well people know about a brand and its products or services—the things that make up their story.

For example, if someone recognises Apple as a technology company but doesn’t associate their logo with iPhones or iPads, they have an awareness problem. They need to tell consumers more about what Apple does before they can create loyalty among them.


Social Media ROI metrics
Measuring social media ROI for your business is a challenging task. But if you’re running a business, you need to know that using social media for your marketing and advertising efforts can boost the lifetime value of your customer acquisition efforts.

Ultimately, finding your specific Social Media ROI will depend on your particular business, but it’s a process that’s worth tracking if you’re even remotely in doubt about the value of your social channels.