Microsoft Azure Certification Training

Measuring the ROI of Your Social Media Marketing—It’s Easier Than You Think

Got ROI? I sure hope so. Return on investment is a pretty critical thing in business. Without it, you’re eventually going to go out of business.

Despite this, a lot of businesses are doing a lot of social media marketing—and very few of them can say for sure that they’re generating any kind of return on investment.

Check out the results of the 2017 Social Media Marketing Industry Report from Social Media Examiner: Most social media marketers—62%—still can’t measure the return on investment for their social media activities. So clearly, measuring social media ROI isn’t easy. That said, it’s not like it’s impossible, either. Thirty-eight percent of marketers can measure return on investment with confidence; we’d like you to be among them.

So how do you figure out the riddle? How can you solve the ROI mystery? Let’s start with the equation that measures ROI in the first place. There are more elaborate versions available, but the basic calculation is this:

So all we need to know to figure out if our social media marketing is profitable or not is:

How much we’re earning from it
How much it costs to make those earnings

Let’s do the math. What does the average social media marketing program cost, anyway?

According to The Content Factory, “Creating a comprehensive strategy for social media marketing and outsourcing all work for all channels (with a minimum of two social networks) costs anywhere from $3,000-$20,000 per month, with the industry average settling between $4,000-$7,000 per month. If you want the social media agency to start the accounts from scratch and consult on a 4- to 12-month contract, you’ll pay between $3,000-$15,000 per month.”

Let’s go with the low end and give ourselves a $3,000 a month budget. Here’s what that might buy you:

One-third of a Marketing Coordinator’s time

One-tenth of a Marketing Manager’s time

One-third of a Customer Service Rep’s time


With those three people on the job, you’ll be able to respond to customer service issues (a major part of any company’s social media presence). You’ll also have a manager reviewing the social media work for about half of one day a week, and you’ll have a marketing coordinator in the trenches, creating posts and doing other tasks about 1.5 days every week.

That’s a frugal time budget, but enough to do a good job.

So what about the other costs? Well, those actually don’t have to be so steep. Still, let’s give you some good tools and a little bit of advertising budget to work with:

Primary social media management tool

Advertising budget

4 other social media tools, $50 per month each

TOTAL for tools and advertising

That’s just enough to maximize your employees’ time, but not so much that it starts to get expensive.

Our total is now $3,831.63, which is strikingly close to what The Content Factory said it would be. So we now know our overhead. Now we need to document that we’re earning more than that $3,831.63 every month.

There’s actually a very simple way to do this. If your company does any pay-per-click advertising, or happens to know what each website visitor is worth, you can figure out how much each referred visitor from social media is worth.

Google Analytics makes this very easy. And if you’ve set up even a couple of goals in analytics, you’ll know the conversion rates for those goals specifically for social media traffic.

Let’s say you’re paying $2.00 per click for AdWords clicks, but your social media traffic doesn’t convert as well as AdWords clicks. Social traffic, you estimate, is worth about 30 cents per click. With just that information, you can quantify all your social media work, though only through the lens of referral traffic.

At 30 cents per visitor, your social media work would have to generate 12,772 visits to your website every month. Again, that’s measuring your social media work exclusively through referral traffic, but the idea of paying for traffic is easy to understand. It’s a nice “apples to apples” way to compare your social media work to your other marketing efforts.

Other Articles From

The Complete 35-Step Guide for Entrepreneurs Starting a Business
25 Frequently Asked Questions on Starting a Business
50 Questions Angel Investors Will Ask Entrepreneurs
17 Key Lessons for Entrepreneurs Starting A Business

But let’s consider another way to quantify your social media work: Email subscribers. Nearly as many small businesses do email marketing as do social media marketing, and the two tactics are quite complementary. Even better, most companies know how much each email subscriber is worth to them (and if you don’t know this, it’s time to find out).

To complement your referral traffic efforts, say you can generate 250 new email subscribers every month; each subscriber is worth $3.00 to you. That certainly doesn’t cover all your social media overhead, but it helps. Those 250 subscribers are worth $750 per month to you, which is 20% of your social media costs.

Here’s what we have so far:

New email subscribers
$3.00 each
$750 total value

Referral traffic to website
10,272 visitors
$0.30 each
$3,081 total value

TOTAL: $3,831

With just that, and no other benefits, your social media program breaks even.

Now let’s quantify what each customer service response is worth to you. These responses help you retain customers, which is valuable. And so you’re willing to pay a certain amount to answer each customer service inquiry.

Let’s say you’re willing to spend $20 to answer each inquiry. Your customer service rep answers about 50 inquiries every month via social media, and so the value of those social interactions is $1,000.

Adding that to our tally:

New email subscribers
$3.00 each
$750 total value

Customer service replies
$20.00 each

Referral traffic to website
6,939 visitors
$0.30 each
$2,081 total value*

TOTAL: $3,831

*Notice that I’m reducing the amount of inbound traffic you need with each new item we add to this list. That’s because I think it’s unrealistic to expect to get 10,000 visitors a month from your social media accounts, unless you have a massive audience.

Now let’s talk about the value of your social media followers. The days of saying a Facebook like is worth $174 are long over, of course. But having a social media audience is obviously some sort of business asset. So what are followers worth to you?

With some careful calculations and some tracking, you should be able to figure out approximately how likely each new follower will become a customer. This isn’t going to be a high figure, but it will be something—say, 2%.

If you know that your customers have a lifetime value of, say, $300, and you know 2% of your social media followers will become customers at some point, it makes sense to value each follower at 2% of $300: $6.

So let’s look at our tally one last time:

New email subscribers
$3.00 each
$750 total value

Customer service replies
$20.00 each

New followers
$6.00 each

Referral traffic to website
300 visitors
$0.30 each
$900 total value

TOTAL: $5,650

Let’s plug that into the return on investment calculator:

That is a positive ROI.

Now, is this a perfect example? Of course not. You and your team will value all these “assets” differently. You’ll have different conversion rates. You’ll have a different overhead to pay for. You might even want to attribute some of your search engine optimization gains to your social media work, and give social media, say, $300 “credit” every month for those benefits. And we haven’t even talked about the investor benefits of having a social media presence, or how it supports PR work.

That’s all for you and your team to figure out. But as you can see, it is definitely not impossible (or even terribly hard) to get a reasonable grip on whether your social media work pays for itself or not.

You may not be able to tie it down to the subatomic level, but with a little effort, you should be able to hammer out an idea of what it would take to call your social media work profitable.

RELATED: How to Untangle Your Content Marketing ROI

The post Measuring the ROI of Your Social Media Marketing—It’s Easier Than You Think appeared first on

The post Measuring the ROI of Your Social Media Marketing—It’s Easier Than You Think appeared first on Click for more information about Brian Sutter.

To discover more visit:

Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.