Social Media ROI

Social media ROI is sometimes viewed as impossible. Calculating ROI can be difficult because translating social media progress into financial or any tangible benefit is complicated. ROI is important because it measures the return companies acquire after investing time and money into having an active social media presence. Companies should determine ROI because it allows them to see if their efforts are working and enables them to improve their overall reach. It also determines which media channels are most successful in generating revenue.

The first step is to define goals. These goals must be a trackable and measurable action from the user's end. Some examples include purchases, downloads, or email sign-ups. The goals should enable you to differentiate between a browsing follower and a lead that will eventually purchase something. This is why simply tracking followers and likes is nice but not wholly meaningful. After this, attach determined goals to different campaigns. This way, each campaign has a purpose and measurable outcome.

Next is actually tracking the goals. Tools to use are Google analytics or Hootsuite Impact. USe Google URL Builder to attach trackable links to each campaign. For each conversion attach a value. Values to use are lifetime value of customers x conversion rate and average sale. These values for each campaign will be the earnings.

Last, social media expenses must be calculated. This includes employee hours, social media tools costs, and advertisement costs. Now, subtract these expenses from the earnings. This should be done for individual social media accounts or even campaigns in order to isolate each and see which site and campaigns are performing the best. Below is the simple ROI formula:

(Earnings-Expenses) x 100 / Expenses = ROI of Social Media