How to calculate return on investment for social media? A quick guide

social media
Dmytro Polishchuk
Dmytro Polishchuk
Content writer and blog editor at PromoRepublic
≈ 3 min read
Upd. on: 2 Aug 2021

Every social media developer or creator knows that social media ROI is probably the most important thing for their business. And if you want to start your own business project on in social media, you should know how to calculate ROI for social media.

What does it mean?return on investment for social media

When people hear that ROI stands for return on investment, they still can`t understand what it means for their business. So, we will start our article with a deeper definition that will help you to understand more about the ROI.

Return on investment is defined as a measure of the efficiency of a social media marketing campaign. In easy words, this number indicates how good or bad your marketing campaign was.

For example, if you increase your return while keeping investment on the same level, it`s good. Bur if decrease your return with the same investment, it`s bad. Remember: higher ROI is always better than lower ROI.

You must understand that social media ROI measures the efficiency of an investment because then you also understand that ROI cannot be defined with alternative definitions. You can`t use “return on inactivity” to measure the efficiency of your campaign.

Social media ROI uses both return and investment

To calculate our social media return on investment, we need to take social media return (the amount of value that we got from our social media campaign) and social media investment (the amount of money that we invested in social media campaign) and run it through the formula:

SM ROI = (SM return – SM investment) / SM investment%.

For the first time, this formula may look very simply, because we already know the amount of value that we invest in social media campaign. However, how can we define the social media return and how do you attach dollar value to the return? To calculate our social media ROI, we need to find answers to both questions.

Social media return is the return on your social media goals

SM return is the value that you derive from your social media campaign. For example, if your main goal in social media is to sell goods, your social media return is the number of sales that you can attribute to your social media campaign. We can give you much more examples, but the main idea is that social media return is based on the goals that you set them at the beginning of your social media campaign.

Quantify your social media returnsocial media return

When we successfully defined our social media return, our next target is to quantify this return into real value – dollars and cents. It`s difficult because you need to look at each type of social media return and develop a method for your quantification.

For example, if we will come back to our example with selling goods, we can quantify our return by looking at the “first touch” sales or we can use other methods like the number of transactions that were made to our bank account.

Calculate your own social media ROI using the formula that we gave you at the beginning of the article. You know what each of these metrics means, so you are able to find our how good us your return on investment.


Related articles

Jul 9, 2019

How to use Instagram analytics right? A complete guide

Instagram analytics is the key to success on this platform. With it, you are able to see changes in your...

Feb 14, 2019

How to improve your LinkedIn company page?

 Simple advices for you If you are running a business page on LinkedIn, this article may be interesting for you....

Feb 14, 2019

Everything about LinkedIn or what all new users should know

When people came to the social media platform for the first time, they could be a little bit disappointed because...

Choose what describes your business best:
What do I choose?

Enterprise: for multi-location and direct selling brands. Manage thousands of social media pages of your local distributors, partners, or franchisees.

Agency: for marketing agencies. Manage all your clients’ social media pages on one platform.