How to calculate your ROI from social media

Having active social media channels is essential for any business owner, but it does take time to plan, schedule and manage your social media. So how can you tell if it’s really worth your time and effort?
 
All your business activities and marketing should generate a return on investment (ROI) otherwise it’s really not worth doing.
 
We take a look at how to calculate your ROI from social media.

What Is Social Media ROI?
Technically speaking, social media ROI is the sum of all your activity on social media that creates value for your business.
 
That value could be sales and bookings, but it could also be things like engagement and brand awareness.
 
What you include in your social media ROI calculation depends on the objectives of your business. Do you only care about sales? Do you want to drive more engagement to reach more people via your organic social activities? Do you want more people to recognise and recommend your brand?
 
Why Do You Need To Measure Social Media ROI?
Just like any other marketing activity, it needs to generate you a return on your investment – whether the investment is time, money, or both.
 
You wouldn’t want to spend money on advertising and then have no idea if it was worth your spend, and the same goes for social media.
 
How Do You Calculate Your Social Media ROI?
There are many different formulas you can use to calculate your social media ROI.
 
One of the most commonly used and accepted formulas is:
Profit / Investment x 100 = social media ROI %

If you need to work out your profit, use this calculation:
Revenue – Investment = Profit

An example would be if you ran a Facebook ad and spent $100. As a result, you sell 10 products at $100 each, so total sales are $1000. The products cost you $50 each to make.
 
To work out your profit you would do the following:
$1000 (revenue) - $500 (investment) = $500 (profit)
$500 (profit) / $100 (investment) = 5 x100 = 500% ROI
 
Tools To Help You Calculate Social Media ROI
Facebook Pixel – essential for seeing how many people engaged with your ads, and which clicks resulted in conversions (find out how to get started here)
 
Custom URLs – creating custom URLs can help you see which ads or posts drove conversions on your website (Google’s URL builder is super simple to use for this)
 
Other Elements To Consider
Sometimes it’s not all about the sale. You can measure your social media ROI with regards to engagement on your channels too.
 
The formula to measure social media engagement is:
Likes +comments + shares + video views / follower count x 100
 
Don’t get fixated on short term gains alone. You should also think about a customer’s lifetime value and factor this into any ROI calculations.
 
Do you want to get a good ROI from your social media efforts?
 
​Frame Social Media specialises in assisting start-ups, small to medium businesses and corporates with their social media presence.
 
We have a range of social media management packages, priced to be as affordable as possible for businesses just like yours.

Take advantage of our 7 day obligation free trial to see if our service meets your expectations!