The benefits that social media brings to a company are numerous and have been proven to date: getting potential customers, reaching out to an audience, creating a community, redirecting traffic to your website or increasing sales are just some of the many advantages that social media brings.
Are you sure that professional use of social media is helping your business?
If a company has social media accounts, posts regularly, responds to comments from its followers and runs paid advertising campaigns, we might think that it will soon start to increase its turnover and improve its results. But this cause-effect relationship is not always true and we cannot say that using social media is productive in all cases.
It is time to ask ourselves questions like: Is the advertising strategy I am implementing the right one? Is the audience I am targeting well defined? Are my ads being shown at the right time and on the right platform? Am I using the most effective texts and images to attract users' attention?
Social ROI, a key indicator
The answer to all these questions starts from the same point: to see if our efforts on social networks are profitable or not, and we will do this by calculating the social ROI . This KPI measures the economic performance (or return on investment) that the actions carried out by the company on networks are having.
Performing this calculation will provide us with very valuable information when making strategic decisions, allowing us to identify whether what we are doing is beneficial or not and which campaigns work better than others.
The keys to calculating social ROI
The formula to do it is this:
Let's now look at the components of the formula in detail:
1. Earnings from social media
Profit is not going to mean the same thing for every company and will depend on the objectives it intends to achieve through the use of social media. In addition, it will not always be financial. For example, a company may be working to improve response times to user comments or modify the positioning of the brand in the minds of its audience.
Social ROI analytics on mobile devices
The steps to estimate it are two:
1.1. Setting objectives
The main thing to keep in mind when defining them is that they meet the SMART characteristics (S-Specific, M-Measurable, A-Achievable, R-Realistic and T-Timed in time)
For example:
Increase online sales by 15% in the second quarter of the year.
1.2.Define the metrics to measure the objectives
The next step is to determine the metrics that will allow us to measure the degree of kuwait numbers achievement of the objectives. The metrics we use will depend on the objectives previously set, so they will not always be the same.
Among the most commonly used are the following:
Reach : Number of users who have seen a post.
Traffic : Number of visitors to a web page that has a conversion objective.
Impressions : Number of times a post has been shown on users' timelines (regardless of whether it was to the same person or different people).
Engagement : Degree of interaction of users with a post (number of times they have “liked”, shared or commented on it).
Conversion rate: Number of total conversions / Number of total visits x 100. Conversion is understood as an objective that we want to achieve, for example, a purchase or filling out a form.
Cost Per Click (CPC): Total cost of the campaign / Total number of clicks on an ad x 100.
CTR : Number of clicks / Number of impressions x 100. It is an indicator of the quality of the ad content.
2. Investment made in social networks
It represents the total cost of actions carried out on social networks and is made up of:
Investment made in paid advertising.
Labor costs of staff managing social networks in the company.
Cost of content creation (graphic design and creatives for ads, blog posts, keyword research, etc.) when done outsourced, through a freelancer or agency.
Analyzing the results of social media campaigns
Let's now look at a couple of examples:
Campaign A. With profits of €11,000 and an investment of €4,000. The ROI is 1.75.
Campaign B. With profits of €19,000 and an investment of €8,000. The ROI is 1.38.
Comparing the two campaigns, we see that both campaigns are profitable (the ROI of both is positive), but the second option is more profitable than the first since the ratio is higher (for every euro invested in the campaign, I have obtained €1.75 back).
Having this information will allow the company to follow the line of campaigns that work best in order to try to optimize them as much as possible and this, in turn, will result in improving the company's overall profitability, making it more efficient.
As you can see, the analysis of results in social networks through KPIs such as ROI is of vital importance when using them professionally. If you are thinking of developing in this field or would like to learn a little more about the calculation of this and other important metrics, we recommend that you sign up for the free online course on virtual community management.