Calculating your social media ROI is essential to proving your social media strategy is having a positive impact on your business goals.
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What is ROI?
ROI stands for Return on Investment.
ROI is a ratio comparing the net return of an investment to the cost of the initial investment. Basically, it’s evaluating how effective a strategy is at making money.
The ROI formula is:
ROI = Net Return on Investment / Cost of Investment X 100%
Which can also be expressed as:
ROI = (Revenue – Costs) / Costs X 100%
What is Social Media ROI?
Social media ROI is translating the concept of ROI to your investments in social media.
It’s establishing the estimated or actual returns of your social media strategy compared to the costs and effort involved of executing the social media campaign.
The social media ROI formula is:
Social Media ROI = (Social Media Returns – Social Media Costs) / Social Media Costs x 100%
Keyhole is a real-time conversation tracker that provides keyword + hashtag analytics and social media analytics across platforms such as Facebook, Twitter and Instagram. Get started for free here.
How to Calculate Social Media ROI
Calculating your social media ROI can be broken down into 5 steps:
1. Determine Your Business Goals
Your social media strategy should aim to directly impact the goals of your business, so start with establishing or clarifying those goals.
These may be goals like:
- Generating revenue
- Growing brand awareness
- Improving brand perception
- Generating leads
- Retaining customers
2. Set Measurable Targets For Each Goal
The next step is to set measurable targets for which you’re going to measure your social media and business success.
Your goals should be quantifiable and easily measurable.
Example goals could be:
- Grow social media followers by 10% within 6 months
- 20 new newsletter subscriptions per month
- Improve customer satisfaction scores by 10%
3. Choose the Metrics You Want to Track
While you already have quantifiable goals, you should likely track a wider scope of social media metrics and other metrics that relate directly to that goal.
For example, if your goal is generating leads, you may have a secondary interest in growing a social media audience. You may therefore have interest in:
- Impressions
- Engagements
- Followers
You should also track metrics that are more closely related to your goal, such as:
- Conversions
- Leads or form submissions
- eCommerce purchases
One or more of these metrics will be used as your “return” in the social media ROI calculation.
4. Sum Up Your Social Media Costs
Your social media costs will likely include a combination of:
- Internal employee time
- Content creation or freelance costs
- Tools, software, and platforms
- Ad spend
5. Calculate Your Social Media ROI
Once you’ve established your returns and your costs, you’re ready to calculate your social media ROI:
For example, if you’re able to attribute eCommerce sales to a social campaign, this may look like:
Social media ROI = (Revenue – Costs) / Costs x 100%
= (Revenue –
(Salaries + Freelancers + Tools + Ads) /
(Salaries + Freelancers + Tools + Ads) x 100%
= ($100,000 – $60,000) / $60,000 x 100%
= 66%
In this case, we profited back an increase of 66% on our initial social media investment.
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Keyhole is a real-time conversation tracker that provides keyword + hashtag analytics and social media analytics across platforms such as Facebook, Twitter and Instagram. Get started for free here.