How to Measure Social Media ROI + 8 Ways to Improve It [Checklist Included]

Social media ROI shows how effective and profitable your campaigns are. Learn how to calculate your return on investment and improve it, according to our experts. Checklist included.

When you run a business, having a clear idea of the ROI (or return on investment) of any strategy you implement ensures you’re not wasting resources on tactics that won’t pan out.

However, social media ROI is less straightforward and can be tricky to measure. And even trickier to improve.

So, we’ll talk more about what social media ROI is, how to calculate it, and ways to get a better ROI from your social media strategy.

What is social media ROI?

Social media ROI, or your social media return on investment, is the monetary value your social media marketing strategy returns to your business.

Social media management has its costs, which may include:

• Team salaries
• Tool subscriptions
• Ad spend
• Content creation costs

You want to make the money back (and then some) when investing in social media channels. Unfortunately, not every interaction on social media is quantifiable, and it’s difficult to put a price tag on the value of brand awareness.

However, measuring your social media ROI is still important. Especially when you’re looking to generate a better ROI from your strategy.

Why social media ROI matters

Knowing your social media ROI ensures you’re not overspending needlessly. It also helps pinpoint if you’re able to allocate more funds to your social media platforms.

But that’s not all.

“Understanding the ROI of our social media efforts has greatly influenced our marketing decisions,” says Matthew Montez, founder of MBC Group. “For instance, if we notice that one social media platform is delivering a more significant ROI than others, we would consider allocating more budget and resources to that platform.”

Montez continues, “Conversely, if another platform isn’t delivering a strong ROI despite consistent efforts, we reassess whether it’s worth our investment. It’s an ongoing process of review and adjustment to ensure we’re maximizing our digital marketing efforts.”

Monitoring your social media ROI month-over-month or quarter-over-quarter helps with smart business and marketing decisions.

More reasons your social media’s return on investment matters:

• You know how many sales and conversions are brought in as a direct result of your social media marketing
• You can get a clear idea of how much traffic your social media platforms send to your website
• You’ll understand how well social media works as a nurturing tool for your customer base
• You can prove value and make a case for growing your team, allocating more resources, or investing in new tools and tactics
• You’ll discover which aspects of your strategy are performing better than others so you can adapt and adjust
• You can figure out how to best allocate your budget across your social networks

How to calculate your social media ROI

The first step in discovering whether you need to improve your social media ROI — and by how much — is calculating it to have a starting point. Follow these four steps to calculate your own social media ROI:

1. Choose your social media goals and objectives
2. Track metrics that align with your goals
3. Look at your social media costs
4. Calculate your social media ROI

1. Choose your social media goals and objectives

First, choose your social media goals and objectives. Why do you want your business to have a presence on social media, anyway? These goals should tie in with your overall business objectives — i.e., do you need to improve awareness or make more sales?

Common goals for social media include:

• Brand awareness
• Community engagement
• Website traffic
• Lead generation
• Conversions or sales

Some brands plan to use social media for less tangible purposes, like awareness and engagement. But others want to see a set return in conversions and leads.

Montez is one of the latter. “To measure the ROI of my social media marketing efforts, I primarily focus on conversions and website traffic. While likes, shares, and comments are a good indication of engagement, they don’t always translate into tangible returns,” shares Montez.

On the other hand, Justin Kerby, founder of Something Great Marketing, shares, “For branding exercises, we focus on indicators like saves, shares, comments, and overall community growth. These metrics provide insights into brand engagement and resonance with the audience, which, while not directly tied to immediate revenue, are crucial for long-term brand equity and loyalty.”

Again, match your social media goals to your business goals. If you’re in a place of growth, goals like leads and conversions may be the biggest thing that matters. However, if you’re happy with your sales, focus on awareness and engagement.

2. Track metrics that align with your goals

After selecting your goals, choose the KPIs to track that align with those goals. Even so-called “vanity metrics” like follower count can be considered important data to track for your ROI.

“To measure social media ROI, I always keep an eye on KPIs related to awareness, engagement, and conversion,” says Sam Tarantino, founder of Harmonic Reach. “For awareness, it’s often about increasing followers and impressions; for engagement, it’s about likes, shares, comments, and mentions; and for conversions, it’s about click-throughs, form fills, or e-commerce sales.”

As Tarantino mentioned, the social media metrics you track will measure different goals. If you’re looking to increase brand awareness, you want more reach and followers. If you’re looking to increase conversions, you need to keep an eye on form submissions and sales.

Tarantino explains further, “The challenge with social media ROI, especially for a startup, is that it’s not always directly tied to revenue. Engagement and followers are important, but they don’t always equate to conversions.”

Even if you want to increase brand awareness above all other objectives, it’s difficult to quantify each new follower’s value.

“Therefore, it’s crucial to take a holistic view of your marketing efforts and use attribution modeling to understand the impact of your social media efforts,” continues Tarantino.

However, attributing ROI to your conversion campaigns can make it a lot easier to track the right metrics.

Steve Pogson, founder of FirstPier, shares the story of an influencer marketing campaign his company ran that delivered considerable ROI for his business.

“We tracked the campaign’s success by using a unique discount code that the influencer shared with their followers. By following the number of times this code was used, we determined the campaign’s impact on sales and could calculate ROI effectively,” explains Pogson.

Using tracking and UTM tags can measure ROI in a more streamlined process. We’ll talk more about that later.

3. Look at your social media costs

The next step is to calculate your overall social media budget or total costs. Knowing how much you’re investing in your social media helps you understand the amount you need to make to see a return on your investment.

We mentioned that common costs include employee salaries, social media ads, tool subscriptions, and more.

So let’s say your quarterly costs look something like this:

• Salaries: $57,750
• Tools: $1,500
• Ad spend: $15,000

You’re spending $74,250 per quarter on social media management. So ideally, you’d bring in more than that from your social media efforts each quarter.

However, this can be difficult on social media. You must assign values to reach, new followers, engagement, and the like. Even direct conversions like sales through social commerce can be difficult to measure fully.

Joe Amaral, founder of Elevated Marketing Experts, explains, “Challenges often arise in attributing specific revenue or conversions to social media activities due to the multiple touchpoints a customer may have before converting.”

What Amaral’s team did to fix this was move to a multi-channel attribution model that takes into account all the digital marketing channels involved in the customer journey.

“We allocate a certain percentage of the conversion value to social media deriving an ‘Assisted Conversion’ value,” continues Amaral.

You can also look at common benchmarks to help you assign value to various social media activities. For example, the average conversion rate on Instagram is 18%.

If your average sale is $50, that means 18% of everyone who’s viewed your recent Instagram ad could potentially make that purchase. So an ad view on Instagram could be worth $9 to your business. But the next step is calculating your overall ROI, and how each $9 view (and other valuable social media activities) adds up against your overall investment.

4. Calculate your social media ROI

To calculate your ROI, you can use a simple ROI calculator you find online — this calculator from Hootsuite calculates your return and investment before figuring out your ROI.

But we will also share the ROI formula so you can calculate it or add it to your monthly/quarterly report.

To calculate your social media return on investment, use this formula:

Return on Investment = ((Total Revenue – Total Investment) / Total Investment) x 100

So if your total investment is $74,250, like in our previous example, and you discover that your total revenue/value/return from social media is $96,000, you’ll conduct the following calculation:

ROI = (($96,000 – $74,250) / $74,250) x 100 = 29.29% ROI

In general, any number above zero is a good ROI — it means you’re making more than you’re investing. However, the higher the number, the better the ROI.

8 tips for improving your social media ROI

If you have a negative ROI, you want to discover ways to improve. If you have a positive ROI, but you’re looking to generate even more revenue, you’ll also want to pay attention to these eight tips for improving your social media ROI:

1. Figure out the best strategy
2. Test new tactics and campaign ideas
3. Boost your social media engagement
4. Target the right audience
5. Track competitor content and performance
6. Use social media marketing tools
7. Run social media ads
8. Monitor and analyze your social media marketing

1. Figure out the best strategy

First, figure out when and how often you should post on each social platform. You can rely on existing data to figure this out, like Sprout Social’s guide to the best times to post:

Although if you dive deeper into Sprout Social’s data, you’ll see these days and times can change based on the platform.

However, you can dig deeper using social media analytics tools to see when your specific audience is online and available to interact with your content. Choose a single third-party tool to access audience information for all platforms, or look at your audience insights within each platform’s built-in analytics to build your posting strategy.

2. Test new tactics and campaign ideas

Trying different ideas and incorporating new tactics into your strategy is another great way to improve your social media marketing ROI. Test different social media posts, create new types of content, and be consistent to ramp up your social media presence.

Justin Kerby, founder of Something Great Marketing, shares a recent example of a successful social media campaign that used A/B testing to refine their message and visuals.

“By carefully analyzing the performance data, we identified the most effective combinations, leading to a 60% increase in engagement and conversions. We tracked these results using our suite of analytics tools, including Google Analytics and Databox, allowing us to measure tangible ROI from the campaign,” explains Kerby.

A/B testing is a scientific method of experimenting with various versions of content to see what performs best on social media.

If you see a boost in engagement rate or follower count, try more of those post types. If not, you know they’re not resonating with your audience and should try something else.

3. Boost your social media engagement

If someone is engaging with your content, they’re likely interested in what you have to say. And if they’re interested in what you have to say, it’s only a short trip for them to become interested in what you have to sell.

Boosting your overall engagement can increase the number of people in your social media marketing funnel, boosting the number of conversions — and the overall ROI of social media.

To increase your engagement, consider some of the following tactics:

• Start engaging with other users on the platform
• Post more content
• Post different types of content
• Run social media ad campaigns
• Create compelling content
• Ask questions

Increasing your engagement is just one way to boost your bottom line.

4. Target the right audience

Another key aspect of increasing your social media ROI is making sure you’re targeting the right people with your organic and paid social media content. If you’re using the wrong targeting, people who aren’t going to become customers could see your content — and that does nothing to improve your social media revenue.

At HawkSEM, we use our proprietary tool ConversionIQ (CIQ) to granularly track every single step of the buyer journey so we can understand what aspects of a campaign are working and where we should trim the fat. This allows us to optimize towards a higher ROAS MoM and YoY.

Further, tracking with CIQ provides more insight into the target audience, which allows us to take that data and use it on another marketing channel (such as SEO or other paid media outlets) to scale further while maintaining profitability.

Using tools like CIQ can help your team ensure they’ve found the right audience for organic social media, content marketing, Facebook ads, and more.

5. Track competitor content and performance

Another way to improve the ROI of your social media marketing campaigns is by tracking and analyzing your competitors and their content. Of course, you won’t have access to internal data, like how many sales they’re gedue toult of their social media presence, but you can see things like follower growth, engagement, and sentiment.

If you see certain types of content do well for your competitors, consider emulating those types of content with your own style and spin. This can improve your overall performance, leading to a higher social media ROI.

6. Use social media marketing tools

Different tools can also help you create a data-driven plan for improving your ROI. Remember that many of these tools require a paid subscription, eating into your social media budget and driving up costs — but many are also worth it.

Social media marketing tools you may want to consider include:

• Management tools
• Analytics tools
• Social listening and monitoring tools
• Content creation tools
• Customer service tools
• Automation tools

Will Yang, Head of Growth & Customer Success at Instrumentl, shares a couple of examples of tools that could help your team.

He explains, “If you’re a B2B company and want to track leads generated from social media, you can set up a Google Analytics goal that tracks all of your website visitors who came from Facebook. That way, you can see how many new leads came in after you started posting on Facebook.”

“If you want to track brand awareness, you can use a tool like BuzzSumo to see which of your posts have been shared most often by other users on social media. This will give you some insight into how effective your content has gotten people excited about what you do,” continues Yang.

7. Run social media ads

Running paid social media ads can also improve your social media ROI — and in a much more measurable way. This is because you can also measure your ROAS (or return on ad spend) and ensure you’re not overspending on ads.

HawkSEM helped Apotheke increase conversion rates by 25% and grow YoY ROAS by 62% through targeted social media ads. By increasing ROAS, you can also increase your overall ROI.

To learn more about how HawkSEM can help your business improve your social media ads, get in touch with a social media consultant today.

8. Monitor and analyze your social media marketing

Finally, the last tip we have is to monitor your social media performance continuously. Using analytics tools and ensuring your strategy is working is the best way to get a positive ROI.

And conversely, being able to immediately identify tactics that aren’t working and phase them out will also improve your ROI.

Jas Banwait Gill, growth manager of SwagMagic, shares a campaign her team recently ran. The campaign was called “Gifts that Spark Joy,” featuring personalized corporate gifts.

The team used a mix of eye-catching visuals and targeted messaging on platforms like LinkedIn, Twitter, and Instagram. They then tracked the campaign’s success through platform-specific analytics tools and their CRM system.

Gill shares, “We saw a 25% increase in website traffic from social media, a 15% rise in conversion rates, and a 30% increase in new client inquiries within two weeks of the campaign launch.”

Furthermore, Gill’s team dove into audience demographics and engagement and purchase behaviors. This gave them the scoop on the groups that love swag, letting them fine-tune who they talk to in our future campaigns.

“It also confirmed how much tailored, eye-catching content matters when bringing in the leads and clients we’re aiming for,” continues Gill.

Social media ROI checklist

Choose your social media goals and objectives

• Brand awareness
• Brand reputation
• Community engagement
• Social listening
• Website traffic
• Lead generation
• Conversions or sales
• Customer service

Track metrics that align with your goals

• Followers
• Views
• Impressions
• Likes
• Shares
• Comments and mentions
• Clicks
• Form submissions
• Leads
• Sales

Look at your social media costs

• Social team salaries
• Social media tool subscriptions
• Ad spend
• Content creation costs
• Influencer campaigns

Calculate your social media ROI

• Use a social media ROI calculator
• Use the social media ROI formula

The takeaway

Want to improve your social media ROI? It’s simple. Focus on creating a high-quality social media strategy, find the best times to post, test new tactics, and continuously calculate your ROI so you know where you need to improve.

Okay, maybe it’s easier said than done.

If you’re looking for help from a professional, let our team at HawkSEM help you. Get in touch today to discover how we can help you get better results from your social media marketing.