Social Media ROI

Most marketers will agree that understanding the ROI of their work is a complex task, and determining where exactly this return comes from can be difficult to pinpoint. Social marketing is broad and can span across multiple channels, audiences, and campaigns, making it challenging to determine which metrics to track and how to interpret them. However, overcoming these hurdles is crucial for any brand to understand how its marketing campaigns are performing and how to make more informed decisions going forward.

What Is Social Media ROI?

Social media ROI (return on investment) compares the value earned from your social channels with the money and time you invest, making it a key metric for understanding how effectively each platform contributes to your overall marketing strategy. Despite metrics like follower growth rate being relatively easy to track, calculating ROI requires more attention to properly tie social performance to revenue metrics, making it a crucial but difficult metric to measure and benchmark.

Why Measuring Your Social Media ROI Matters

Measuring your ROI on social media is crucial because it enables brands and social media managers to demonstrate the value of their work. It is a singular number that showcases results and is easy to understand. By measuring ROI, you can also: 

• Create and iterate on your strategy and tactics. 
• Defend and grow your budget.
• Align social goals with larger business goals.
• Showcase the impact of long-term brand building. 
  

And these are just a few of the reasons you should measure your ROI. Let’s dive into how to do it.

How To Calculate Your ROI on Social Media

While your ROI exact calculation may vary depending on your tactic and goals, the most common and general formula for calculating ROI is:

This formula provides a percentage of revenue generated, where zero indicates a break-even point, a positive number represents the percentage gained over your original investment, and a negative number represents the percentage lost.

With the complexity of marketing in mind, marketers need to maintain a detailed record of expenses, including ad spend, content creation costs, and influencer fees. This data is then used to analyze the cost-effectiveness of different tactics, providing a good indication of which strategies are performing well.

Why Measuring Social Media ROI Can Be Challenging

Social media is particularly challenging to measure the ROI for, as it encompasses many intangible concepts, such as brand awareness or intent to buy. Ideally, a customer will click on a social media button and convert to a trackable e-commerce page, but it’s not always that straightforward. Sometimes they see an ad on Instagram and visit your retail store instead.

Other times, a viewer doesn’t buy your product, but they share your post with a friend who ultimately does. Due to the multi-touch nature of online shopping and social media, accurately determining return is challenging, as every interaction with a brand influences purchase decisions. Yet typically only the last touch can be tied to revenue.

Tips To Improve Your Social Media ROI

Some best practices to consider when improving your ROI include setting a clear budget, regularly reviewing and adjusting campaigns based on performance, and experimenting with new ideas to determine what works best for the brand. The marketing industry is constantly inventing new ways to meet audiences and improve return on investment. Below are a few ways you can start now.

Optimize Posting Frequency With Repurposed Content

Content has value long after it is published. Brands can extend the impact and value of a single piece of content by repurposing it for various channels and formats, effectively stretching it indefinitely. For example, a blog post can be turned into a social media post. Clips from a long-form video can be edited into short-form video content. Repurposing content extends its reach, taking advantage of the different audiences on different channels to increase engagement. Time is money, and repurposed content is also a huge time-saver. It eliminates the need to create entirely new content for each channel. This is an important step for brands to maximize their marketing ROI.

Run A/B Tests

A/B testing is a form of experimentation where brands test multiple ads or pieces of content to determine which one does the best. An A/B testing strategy can include anything from imagery, headlines, and layout to granular details such as word choice. Though it is called A/B testing, marketers can take it from A to Z by continually testing how they communicate with customers. 

Testing is essential for understanding what resonates, but waiting weeks for results can slow your momentum. By using AI-powered tools for content creation, like Dash Social’s Content Performance Predictions, brands can identify their top-performing creative before anything even goes live. That means less guesswork, less wasted spend, and faster insights, without the time lag of traditional testing.

With AI helping you predict winners early, you can launch with confidence, drive stronger engagement and conversions, and ultimately get more ROI from every piece of content. Continuous testing and optimization then layer on even more efficiency, ensuring your marketing dollars work harder for you.

Leverage Social Commerce

By optimizing your channels and content with social commerce in mind, brands can remove friction points from the process, ultimately shortening the path to purchase and increasing the likelihood of conversions. Beyond just making it easier for customers to buy your product or service, prioritizing social commerce also helps improve attribution and reporting, as many social platforms track the full purchase journey when it happens within the app, leaving you with cleaner, more concrete insights about what’s actually contributing to your ROI and what’s not.

Explore Creator Partnerships

We know creator management and partnerships are already on your radar or a full-fledged part of your strategy, but their impact on ROI is something that cannot be downplayed. Partnering with the right creators expands your reach far beyond your typical audience and drives higher conversions through the trust and authenticity that influencers have fostered within their community. Not to mention that working with creators also reduces internal content creation costs, allowing you to stay on brand, on trend, and on top of paid assets and UGC.

Monitor Competitor Behavior

Checking in to see what your competitors are up to on social is no longer an option; it’s a necessity. Think of it this way: your competitors are the ones who have to take the risks, but you get to reap the rewards. By seeing what’s working (and what’s not) for them, you’ll be able to get a really good idea of where you want to invest your resources, which areas of opportunity are waiting for you to jump on, and even be able to set a healthy benchmark for overall ROI and performance.

Conclusion and Key Takeaways

• Track ROI using clear metrics.
• Use both paid and organic benchmarks.
• Update your strategy based on results.