How Social Media Impacts ROI:
Social media is the great leveler of our age, the apotheosis of the shift from the one-to-many to the many-to-many models of communication, the subway train that banker and bus-boy alike all ride. In certain ways, it’s also the most complex innovation in digital marketing, so it’s worth remembering that digital ad spend eclipsed traditional advertising budgets in 2019. By 2023, digital will comprise over two-thirds of total ad spend. Point being, social media seems here to stay, and companies should use it to maintain an ongoing conversation with the world—enhancing their brand awareness and extending their customers’ lifetime value.
Yet even though social media may be the preferred advertising art form of the future, it’s still often so unruly, so hard to track and control. Social content can send shock-waves through the internet, conjuring up a tsunami of likes and shares and reposts, but—was it worth the cost? Hard to say. Or, at least, hard to correlate those intangible results to sales figures on a 1:1 basis. So how do you quantify this most qualitative medium? You’re about to find out.
Calculate Your Investment
If you want to determine how your social media marketing impacts your return on investment, you need to keep a record of your investment. Tab up the cost of the platforms that you’re using. (Most are free, but you may be paying for a premium version of a management tool, etc.) Then take note of the money that you spent on paid digital ads and on labor. Correlating a content creator’s salary to the results that come back probably isn’t arithmetically sound, but it’s worth poring over hours billed per project or how much you’re shelling out to freelancers.
The meaning of the numbers that bubble up may depend on how your social media eventually performs. For the moment, though, tally it up and put it aside.
Match Metrics to Goals
As you track how much you’re spending, determine what you want to accomplish with that money. Do you want to improve your SEO, add new email signups, sell more puppy-training sessions through your ecommerce platform? Pinpoint your goals, then calibrate the results with metrics that are commensurate to the value of those goals.
Let’s say that you want to improve your SEO. Measure whether your bounce rate goes up or down—but not whether your profits go up or down. Conversions and site traffic and lead generation all tie together, but they’re also distinct returns. So choose the yardstick that you want to plunge into the market, and benchmark your current stats so you can compare them with the outcomes. Knowing how you perform now will give you a sense of how realistic your goals are. Imagine that 100 people have signed up to your email list. Adding another 100 this month is—to put it mildly—ambitious. Adding another 10? Doable, and a good goal.
Bear in mind, though, that there is a bewildering array of objectives that you could achieve and KPIs that you could measure. So, we beg of you, don’t try to measure them all. Track a few metrics—and track the right metrics. A savvy social media marketing agency might tell you that views, likes, retweets, and followers are considered “vanity metrics.” Sure, it feels nice when someone gives your post a thumbs up, but it doesn’t necessarily translate into a business result (like a sale or a new customer). Whereas other insights are more illuminating:
- Bounce rates tell you if you’re maintaining your audience’s attention.
- Engagement rates tell you how many people are commenting on your posts.
- Converting click attributions tell you which ad a customer clicked on before making a purchase. (More on this stat later.)
Sharpen Your Tools
Since tracking and measuring are integral skills in social media marketing, it should come as no surprise that instruments galore exist to crunch the numbers on how social impacts ROI. Here are just a few of them:
- Hootsuite built a calculator where you can plug in data like Facebook visits or landing page conversions and match them against your overall investment.
- If you want to get precise about those visits and conversions, let Google Analytics give you a panoramic view of all the numbers flowing through your funnels.
- Building links with UTM parameters helps you understand which sites your visitors came from, which channels routed them in, which part of a promotion they clicked on, and so on.
The takeaways that these tools provide, in sum, indicate which of your marketing efforts you should work on because they’re underperforming—as well as which ones are over performing, and need some extra rocket fuel poured on them.
Don’t Wait to Iterate
A good digital marketing agency is always measuring the results of a campaign, but they should also measure different versions of that campaign to gauge which one impacts ROI most effectively. So keep A/B testing. Target different audiences. Experiment with a range of tones. Tinker with the copy and the CTAs. Sub out a carousel for a pulldown ad. See what works, but also adopt the mindset that no one thing “works.” The market’s always in flux, so be ready to pivot on strategies as you monitor which aspects of a campaign your audience responds to the best.
Companies that don’t like how their audience is responding—or that panic because their audience isn’t responding at all—sometimes hose out more content as a quick-fix solution. Beware this tactic, because inundating the market can feel spammy. In a word: Slow it down. People prefer digital experiences that feel well-executed and personalized to them rather than torpedoed willy-nilly in their general direction.
Redefine the Return
You know how much money you’ve piped into your social media plan, and now the results are coming back. But what do the numbers mean? A reasonable business leader might assume that one dollar spent on social media should return at least one dollar in revenue. As we’ve indicated, though, your upfront return might not even be money at all.
Strictly speaking, companies don’t need social media. Factories and restaurants and brokerage offices would pump along just fine without a Facebook account. But having social media imparts legitimacy onto your brand. Think about it: If you’re applying to an engineering firm, but they don’t have a LinkedIn page, wouldn’t they seem behind the times to you? (Like, probably-not-much-career-growth-here behind the times?)
Without a social media presence, you also lose opportunities to stake out what distinguishes you from the competition. Look at this Ben & Jerry’s tweet about how Brown v. Board of Education led to the school-to-prison pipeline. The comments that their post garnered range from “This is why you’re my favorite brand of ice cream” to “Bro, you’re ice cream.” Yet Ben & Jerry’s is at least positioning itself front and center in the public forum. Is this positioning performative or genuine? Up for debate. But it seems that the value of engaging with multiple audiences about a complex topic on social media may be cultural cachet and brand visibility rather than a single line-item amount.
Give it Time
Print advertising was all about big, bold declarations—billboards or magazines plastered with headlines that wowed viewers. Digital advertising is less about seizing an audience’s attention and more about serving them bite-sized reminders across the channels they frequent. One of the difficulties with social media is that it’s snackable, and perfectly suited to serve up those reminders, but it moves so quickly that it can put campaigns into hyperdrive, truncating the lifespan of a marketing investment and making its results too intertwined to unthread.
Remember “last click attributions”? That metric can help you see how a post might lead to 100 people clicking into your site and spending $5,000 on your product. All that’s useful to know, but some marketers argue that the insights it provides are somewhat blindered—it doesn’t take into account the other touchpoints that had previously introduced the customer to a brand. After you Googled, “I want the best vacuum cleaner,” Dyson and Shark ads may have popped up on your social platforms. You did your research. You were leaning toward Dyson. Then you saw one last Dyson ad on Facebook and clicked the link and made the purchase.
That single Dyson ad may not have been the superstar in this scenario. Maybe it was just the last reminder in a series of waves and winks—many of which happen through multiple interactions with Dyson’s social media that are hard to alchemize into dollars. So even though social media is fast-paced, give it enough time to mature and glue together all the collateral that contribute to your brand awareness. The return you get on that may be immeasurable.