For a lot of companies, measuring social media ROI is a puzzle, but something they know they should be doing. With so much time and effort going into social media marketing, you need some way of knowing whether or not it’s paying off. Otherwise, you could wind up wasting valuable resources on something that’s not working.
Just because your Facebook page is growing and you’re getting more engagement on your Instagram posts, that doesn’t automatically mean your efforts are paying off. Social media marketing isn’t just about building up your vanity metrics. Eventually, you want to see some sort of monetary gain.
In this post we’re going to delve into what social media ROI is, how to measure it and some of the challenges you need to be aware of.
What is Social Media ROI?
We have to start out by defining exactly what social media ROI is. There are a few varying ideas on the topic, but in its most basic form social media ROI is the value or return you get from the resources you invest in your social media marketing efforts.
But here’s where things get tricky. The “return” portion is going to depend on what your goals are. That’s why the first step to figuring out your social media ROI is to decide what your goals are.
Defining Your Goals
In order to calculate your return, you need to define a goal. Your social media goal should be a measurable action that can have a monetary value attached to it.
For example, reach is a metric a lot of marketers measure but it’s difficult to attach a monetary value to it. Plus, it’s not an action.
Some better options are:
- Trial signups
- Lead magnet downloads (eBooks, newsletters, etc.)
- Contact form completions
Once you settle on a goal, the next step is setting up a way to measure it.
Putting a Value on Your Goal
In this step, you need to calculate how much each goal conversion is worth. In other words, what’s the value of someone that fills out the lead generation form on your website?
This number is going to vary business to business.
The easiest way to figure this out is to look at your historical data to find what the lifetime value of a renter is. Your CRM or property management software should have this data available for you. If not, here’s a very simple spreadsheet you can use.
In order to edit it with your own information, you’ll need to go to File > Make a Copy.
Alternatively, you can use this free tool. However, it’s not really aimed at the multifamily industry so you may be better off with the spreadsheet.
Next, you need to figure out what your conversion rate is for your specific goal. For instance, let’s say 1/10 people that fills out your lead generation form becomes a renter. That’s a 10% conversion rate.
Multiply that by your average lifetime value and you’ll have the value of each goal completion. So if your lifetime value was $6,000, each goal completion would be worth $600 with our 10% conversion rate (6,000 * 10%).
Measuring Your Goals
There are a lot of analytics tools out there that will help you measure your efforts, but Google Analytics is definitely one of the most popular options. It’s simple to use and has goal tracking built in. This makes it easier to track a website visitor’s actions from the point they click a link on Facebook or Twitter to when they complete one of your specified actions.
To get started, log into Google Analytics and go to Admin > Goals
This is where you can create a new goal. Enter in a name for the goal. For goal type, you’ll most likely want to choose Destination. That means that the goal will be triggered once a visitor lands on a specific page of your site.
On the next screen, you’ll enter important details like the page a person has to land on in order to trigger the goal, and the value of each goal completion (which we calculated earlier).
The destination page should be set to whatever page the person lands on after they’ve completed the action for your goal. If your goal was to fill out a lead generation form, after the form is filled out you could direct them to a thank you page. Use that page’s URL for the destination field.
Then save and you’re done. You can also get into more advanced things like setting up a funnel path. (If you’re interested in having deeper tracking setup, don't hesitate to reach out!)
Once this is setup, you’ll be able to see your conversions and how much is coming in from each social media channel in Google Analytics. Just go to Reporting > Acquisitions > Social > Conversions.
Measuring Specific Campaigns
That was a basic overview of measuring all-around social media ROI. However, if you want to measure the value of specific social media campaigns, then you’ll need to dive in a little deeper and use UTM parameters to track your links.
UTM parameters allow your analytics tool to attribute link clicks to a specific campaign. For instance, let’s say you were running a campaign on Twitter to promote your newly renovated two bedroom apartments. You want to be able to see how many lead generation forms were filled out from people that came through specific Tweets.
Using Google’s URL builder, you can easily create a trackable link that will differentiate link clicks for this specific campaign from other Tweets and mentions of the promotion. Here’s how to do it.
In the URL builder, you’ll see a bunch of different fields. The only fields you need to worry about are the required ones.
- Website URL: This is where you’ll enter the URL of the actual landing page people will click through to.
- Campaign Source: The specific social network you’re going to be using. For our example, that’s Twitter.
- Campaign Medium: The type of traffic you’re tracking. In this case, social. If you were running an email campaign you could enter email, or cpc for paid ads.
- Campaign Name: The name of your promo so you can identify what this URL is for. We’ll use “renovatedpromo”.
Once you click Generate URL, you’ll get a URL that looks like this:
This is the URL you’ll want to use in your Tweets instead of linking directly to the landing page. Keep a spreadsheet with all of your Custom URL’s so you can easily access them when you need to.
You’ll be able to log into Google Analytics under “Acquisition > Campaigns” to see data and conversions for all of your campaigns.
Measuring Your Investment
One of the biggest myths of social media marketing is that it’s free. While Facebook, Twitter and other social networks don’t charge a fee to sign up and use them, don’t overlook the costs of maintaining it all.
Here are some of the costs that you should include in the investment part of calculating your social media ROI:
- Time: Whether you handle your social media marketing yourself, hired an agency or have employees, you need to account for your time because it’s not free. For employees, you can simply use their hourly pay and calculate per month. For your personal time, figure out a reasonable amount that you’d pay yourself for all your social media marketing efforts.
- Tools: If you use any paid social media or content marketing tools to manage your campaigns, include those costs.
- Content: Did you pay to have content written up? This could include a writer to create social media messaging, or even blog content that’s a part of a specific campaign. Include it here. You can save on this cost by using our social media post templates!
- Ad Spend: If you’re running paid ads on Facebook, Twitter, Instagram or other networks, include those costs here.
Add up all these costs and you’ll have the total amount invested in your social media marketing. Companies that don’t actively measure their social media ROI tend to skip this and just look at their returns because they treat social as a free marketing channel. After you add up these costs, you’ll realize it’s far from free.
Now that you have all of this calculated, you can figure out your ROI using the calculation mentioned earlier:
Social Media ROI = (Return - Investment) / Investment
Why Measuring Social Media ROI is Difficult
As you can see, when you look at social media ROI from a linear perspective, it’s actually not very difficult to calculate. But there are a few reasons why it’s not as clear-cut as it seems.
For one, attribution is difficult to accurately measure. A lot of companies use the last touch attribution model, where conversions are attributed to the last “touchpoint”.
The problem here is if someone initially heard of your brand on Instagram, but doesn’t convert until they stumble across a blog post on your site weeks later, that conversion would be 100% attributed to the blog. However, social media contributed to that conversion, so attributing it entirely to the blog isn’t really accurate.
As Rand Fishkin points out in this Whiteboard Friday video, most customers interact with a brand several times on multiple platforms before converting. That’s why multi-touch attribution is the preferred model for online marketing.
Multi-touch attribution credits each channel that contributes to the conversion. This gives you a more accurate idea of what your social media ROI really is.
The other challenge of measuring social media ROI is the growth of networks like Instagram and Snapchat that don’t allow clickable URL’s within the content you share. These networks are tremendous for branding, but unfortunately it’s difficult to put metrics on the value they provide.
There are some workarounds for this, such as using unlinked URL’s in Instagram captions or directing users to a specific URL in your Snapchat stories, but it’s not completely accurate.
Despite these minor setbacks, you still need to measure your social media ROI. We’ll probably never get to the point where it becomes an exact science, but you can get a very good idea of whether or not your social media marketing is paying off, and how much revenue you’re generating as a result.
Stop guessing and assuming whether or not your social media marketing is working and contact us today!