Social media ROI measures the value of your marketing efforts against your investment, and you’ll want to monitor the right metrics to calculate it properly. Value varies for different businesses, and might look like conversions, brand awareness, leads, or engagement.

Think you’ll only find your customers on Google? Think again. According to 87% of marketers, consumers will seek out information on social media before search engines in 2024.

It’s easy to see why: both paid and organic social media offer serious revenue potential to raise your bottom line.

But the best way to capitalize on that potential is to calculate social media ROI (return on investment).

Here, HawkSEM Lead Strategist and social media expert Nicole Goodnough helps break down her method to calculate social media ROI, metrics to look for, and how to optimize for better ROI and conversions.

Woman hand using smartphone and show technology icon social media. Concept social network.

(Image: sitthiphong/Adobe)

What is social media ROI?

Social media ROI measures the value of your social media marketing results against the costs you invest to achieve them.

Those costs include social media budgets for ad campaigns, in-house marketing team salaries, software subscriptions, and any other costs to operate your social media strategy.

So is the answer to high ROI to simply lower your costs? Not necessarily.

Even a high ad spend can deliver a solid ROI if you generate results like engagement, reach, leads, and conversions. But ROI goes beyond just sales.

While conversions translate to direct monetary value, the value in ROI includes overall business value. For example, wide exposure could improve your brand reputation and customer retention, which can bring as much value as conversions.

ROI helps you assess what’s working in your digital marketing strategy and gives you a goal to work toward. It’s also a great way to prove to stakeholders and investors that you bring value to their investment or business.

But to prove that value, you need the right metrics.

How do you calculate social media ROI?

Marketers gauge social media ROI as a percentage. If the percentage is any number higher than zero, that means you gained ROI on your social media efforts.

If the number is negative, then you spent more than you gained in return.

Determining a good ROI for paid social campaigns is really up to each individual client, channel, and campaign,” says Goodnough.

We have to take into account what the cost for a service or product is to know what a customer’s lifetime revenue is, and then calculate what is a ‘good’ ROI or ROAS for each client.”

She adds that some clients need a 3.5X ROAS to be profitable, while other companies have more complex products and need 12-15X ROAS. It all varies.

A formula for calculating social media ROI

Here’s the formula for how to calculate social media ROI:

(Total value generated / cost of social media investments) x 100 = X%

While the above calculation is a general starting point, it paints too vague a picture for every business. The truth is that ROI depends on what results you assign the most value to.

We’ll walk through our process to calculate ROI and what value looks like for different business goals:

  1. Define your business and social media goals
  2. Monitor metrics that align with your business goals
  3. Determine the total cost of your social media activities
  4. Calculate your social media ROI

1. Define your business and social media goals

Need more sales? That’s a common business goal. But in the context of social media, so are:

  • Exposure: You want your audience to be more familiar with your brand and establish yourself as an authority in your industry.
  • Social media engagement: Most brands want to generate more buzz, get positive feedback about their content, and build relationships with other players in your industry.
  • Conversions: The goal here is to get your target audience to take direct action that leads to revenue, including purchases, app installs, or demo downloads.
  • Lead generation: You want to identify more market-qualified leads (MQLs) in your audience who are most interested in your products, which you can achieve with newsletter signups and landing page submissions.
  • Audience data: Learning more about your audience, including their pain points, demographics, and online behavior, will help you better market to them.
  • Brand repair and crisis management: You want to mitigate negative press about a past event that impacted your brand’s reputation.

When you prioritize your business goals, you can better attribute value to the results of your social media marketing efforts.

2. Monitor metrics that align with your business goals

Social media metrics are data points that indicate performance for your marketing efforts.

When it comes to metrics that are most vital in paid social performance monitoring, Goodnough says it depends largely on the campaign goal.

If the goal is awareness, I focus on developing engaging creative and the right audiences so I can measure effectiveness by monitoring engagement rate, unique reach, CTR, and site traffic,” she explains.

When the goal is to drive conversions or leads, it’s critical to create ads that speak to the target audience and give them a reason to convert.”

For lead gen campaigns, Goodnough focuses on the number and conversion rate of quality leads and the corresponding ROI (if there is a value tied to the conversion).

For sales campaigns, I pay attention to the volume of purchases, average order value (AOV), and ROAS,” she adds.

These are the top social media metrics to monitor:

Vanity metrics

Vanity metrics like followers, likes, and comments show how your audience engages with your brand’s content.

For example, we boosted engagement for luxury fragrance brand Apotheke by implementing a social media marketing strategy that leveraged influencer partnerships to engage more of their audience.

The result was more eyes on Apotheke’s content sourced from influencer engagement. The strategy also improved audience sentiment by humanizing the brand, making it more relatable. All this amounted to a 25% increase in conversions.

Conversion rate

Conversion rate compares your total number of visitors to the ones who actually take action on your social media profile or website. For example, if you have 100 total website visitors and 10 of them make a purchase, your conversion rate is 10%.

Impressions

Impressions show how often your content was seen by your audience. Even if you don’t receive a like or a comment, abundant impressions indicate more brand awareness and exposure.

Keep in mind that impressions can count for the same person viewing your content, so they don’t always indicate total reach.

Reach

Reach shows you how many people see your social media content. You can look at the overall reach for your content, or for specific posts, Reels, and videos.

Most social networks allow you to dive deeper and identify the number of followers versus non-followers seeing your content.

The latter demonstrates a strong keyword strategy that pleases the algorithm, as you appear in feeds and searches for potential new audiences that haven’t yet discovered your brand.

Clickthrough rate (CTR)

CTR tells you how often people who see your social ads click and navigate to your website, compared to the people who just scroll past your ad. It’s a great way to assess how effective your ads are in moving your audience down the funnel.

Brand mentions

This is another engagement metric that shows how often your audience mentions and tags your brand in social media content. This might look like potential customers gushing about a product or asking a question.

But brand mentions can also be strategic and enhance your social media presence if you engage your partners, investors, or media reports, like Sprout Social achieves with this Vox reporter on X:

Sproutsocialtweet

(Image: X screenshot)

Audience growth rate

This metric measures how quickly you gain followers on a social media platform. Instagram and Facebook Analytics can calculate this metric for you. But if you wanted to do it on your own, you’d pick a time period and then complete this formula:

((Number of followers at the end of time period – Number of followers at the beginning of time period) / Number of followers at the beginning) x 100

Once you decide which metrics are most important to your business goals, you can estimate the value brought by each one in your calculation.

Here at HawkSEM, we assess metrics on each social platform’s analytics areas. But how do you see beyond each platform or social media post and understand where your revenue comes from?

ConversionIQ for social media performance monitoring

Less tangible social media results like engagement or exposure aren’t always easy to attribute revenue to. That’s when we lean on help from performance analysis software.

Our proprietary tech, ConversionIQ, analyzes all the data and revenue attribution to every metric and initiative in your social media strategy.

CIQ displays all the data in a single dashboard, so we can get the holistic view of ad performance in one place to analyze and see what’s working and what’s not,” Goodnough explains.

3. Determine the total cost of your social media activities

How much money do you allocate for your social media marketing campaigns? For the most accurate ROI calculation, account for every dollar.

Here’s what we look at:

  • Subscriptions: You might use customer relationship management tools (CRMs) like Hubspot or social media analytics tools like Hootsuite.
  • Ad campaign budgets: These are your daily and total budgets for each PPC campaign on each of your social media platforms.
  • Agency costs: This includes all fees charged by any agency you outsource your content marketing tasks to.
  • Employee salaries: Look at the full salary package for every employee in your social media team, including graphic designers, content creators, writers, and marketing analysts.
  • Partnership costs: This includes commissions that you offer to any influencer partners or other collaborators who bring you referrals.

Now that you have the total cost of your investment, you’re ready to crunch some numbers.

4. Calculate your social media marketing ROI

It’s time to see if your social media strategy is a hit with your audience and budget.

We measure the ROI of paid social campaigns by looking at the campaign goal, related metrics, and costs,” says Goodnough.

You can also find more specific ROI specs on your social media campaigns with social media management platform Hootsuite’s online calculator.

While the calculator centers around Facebook Ads, you could input data and metrics from your other social platforms as well:

Just keep in mind that these figures don’t always capture as wide a picture as an agency’s more extensive calculations.

This comes down to the fact that every business has unique costs depending on their KPIs, campaigns, and marketing costs not accounted for in the free calculator, such as online software costs, or any engagement metrics.

3 ways to optimize social media ROI

The marketer’s day isn’t over once they calculate ROI. If you aren’t happy with the numbers, Goodnough says to make sure you’re using the right campaign optimization.

“If you’re running a video view campaign, you’re telling the platform to find users who are most likely to watch your video,” she explains.

Want to drive conversions? You need to be running a conversion campaign. Goodnough also recommends building a retargeting audience based on your ad engagement and running a conversion campaign targeting those highly engaged users.

There’s always room for improvement, and here are three ways we like to optimize social media campaigns:

  1. Run A/B tests
  2. Get to know your audience better
  3. Perfect your campaign schedule

Run A/B tests

ROI not where you want it? A/B tests can help identify what’s working and what isn’t.

A/B testing on paid social isn’t just testing creative,” Goodnough says. “We test audiences, bid type, placements, conversion location, and more.”

The key is to test one social media element at a time for the most accurate results. This might look like testing different types of content, bids, formats, or platforms.

For example, you might test the same campaign on Pinterest versus Instagram to see which channel gets you the most engagement.

Or, you might test the same campaign on the same social media platform, but with different targeting criteria to see which one gets you the most bang for your buck.

Get to know your audience better

You could have the most engaging Instagram Stories and get 1,000 views in a day, but if those views aren’t from the right audience, they won’t convert or contribute to your ROI.

The best way to market to your audience is to understand them. You would normally dive deep into your Google Analytics profile to learn about who sees, interacts with, and converts with your PPC content.

Well, you can do the same with the social media analytics sections of Instagram, TikTok, Facebook, X, and Pinterest.

Of course, social channels vary in their capabilities with analyzing audience data based on privacy laws and platform uses, like having a B2B focus on LinkedIn vs. video engagement on TikTok.

In Meta, HawkSEM monitors the influence of paid social efforts on Google traffic by creating custom conversions in Meta to see what audiences and creative drive users to research brands on Google,” says Goodnough.

On LinkedIn, we can evaluate site visitors and drill down what industries and job titles or functions are actively engaging with high-value pages, like pricing pages or book-a-demo pages.”

She explains that TikTok allows marketers to see aggregated data on things like hashtag interactions, ad interest category engagement, and creator interactions to help inform targeting and content strategy for future campaigns.

Personally, I like the audience insights that social provides because we can leverage people’s preferences to inform our creative strategy better than what we’re able to glean from PPC,” she adds, “which is mainly keyword and website behavior focused.”

Perfect your campaign schedule

Think the weekend is the best time to post on Instagram? Sure, your 9 to 5 audience might be off work and have more time to scroll. But chances are, they won’t watch your Stories or see your ads if you post at off-peak times. Sunday happens to be a perfect example.

Sprout Social did the research and found that Sundays are the worst days to post on Instagram, and even suggested specific time slots for other days of the week, like 11 a.m. on Fridays.

The takeaway

Social media marketing is a proven tactic for engagement and conversions, but social media success takes a significant investment of time and money.

WebFX says brands spend anywhere from $1,000 to $25,000 on social media advertising. But unless you learn how to calculate and optimize your social media ROI, that investment could set your budget back.

In marketing, every strategic move needs the right data to back it up.

That’s why our PPC strategists at HawkSEM study every metric and detail of your social media strategy to make the most data-driven decisions.

We’re obsessed with data and revenue, which is why our clients generate an average 4.5X ROI on their social media marketing efforts.

Need a partner that can calculate and skyrocket your social media ROI? We’re here to make you soar — reach out for a consultation today.

Christina Lyon

Christina Lyon

Christina Lyon is an entrepreneur and writer from sunny SoCal. She leads Lyon Content, a tight-knit team of bold creatives, and crafts engaging written content that helps brands sparkle and scale.