There’s a famous saying, ‘You get out what you put in’. Basically, it’s all about return on investment (ROI). At its core, ROI is a mathematical equation that determines the results (or revenue) of what you have invested in (or spent). It can often be tricky for marketers to track and understand ROI as there are many working parts to the aforementioned equation I simplified above. This is especially true when you are trying to calculate ROI from your efforts on social media. In this cont
s context, ROI is related to the value generated by your social media investments. While it certainly does include the obvious monetary figure of Facebook and Google Ads spend, it also factors in the back-end costs of software expenses, internet access, employees and more. I believe the best way to understand ROI for social media is within the context of a campaign funnel. The metrics you use to determine strong ROI should vary according to each level of the funnel, as each stage is trying to achieve something different. So, what exactly should you be measuring through each stage of the funnel? I’ll walk you through it now. 1. Say hello to potential new customers When running a social media campaign from start to finish, you’ll need to start your funnel with building awareness. There’s no point trying to sell the next best thing after sliced bread if nobody knows about it! Here you will introduce your brand, build your presence and try to get in front of as many eyeballs as possible. Therefore, the efforts you make should result in measurable outcomes such as: ● Reach: The total number of people who see your content. ● Impressions: The number of times your content is displayed, regardless of whether it was clicked on or not. It’s important to note that a viewer doesn’t have to engage with your post for it to count as an impression, and it’s also possible for one person to have multiple impressions for a single piece of content. ● Content views or saves: The number of people who viewed your content and/or saved it to go back to later. ● Engagements: The public shares, likes and comments. If you take a step back and look at social media as yet another handy sales tool, organic content actually begins to look like referral traffic, rather than just ‘social networking’. This means that when you post something to your account and it is engaged with, shared or clicked on by your audience, it becomes a measurable outcome. Understanding how the total amount of money that you have spent – which, as I mentioned before, is related to more than just the direct cost of funding the ad – has achieved X amount of content views or engagement is how you get your ROI for this area of the funnel. 2. Taking it to the next level At this stage of the funnel, we want followers and social media users to take the next step with our brand. Now that they know about us, we want them to interact with us. This second stage means you are aiming for: ● Link clicks: Users see your ad and click on it to take them to your website where they will browse and add to cart and/or make a purchase ● Website signups: For newsletters, EDMs, restock notifications, exclusive offers, etc. ● Lead generation: You can do this by creating Instagram lead generation ads that target specific audiences, teasing on-site content, product tagging on posts and more. ● Further engagement: More site click throughs, giveaways that encourage comments and tagging, etc. ● If you’re lucky, even some conversions (i.e. sales) Seeing how the money you are spending is translating into these types of metrics is where the ROI lies at this level of the funnel. 3. It’s crunch time At the conversion stage of the funnel, you are trying to sell, sell, sell. It’s all about converting prospects into paying customers who are generating revenue for your business. This stage aligns with the most mainstream understanding of ROI, as conversions are measured in monetary value – i.e. you’ll be calculating how much each sale is bringing in against every dollar it has cost you to make it. While the formula I have outlined at each funnel stage may sound eerily similar to return on ads spend (ROAS), it is the very action of factoring in the indirect costs of running the campaign that differentiates ROI from ROAS. ROI is generated when you calculate your entire concerted effort to generate sales from social media against the resulting outcome. At the core of it, when measuring ROI for social media activity, it is your business’ objectives that are the determining factors. If your goal is to drive up social media followers, you’ll be employing slightly different tactics than if you were just looking for sales –and the ROI levels you’ll be aiming for will be reflective of this difference. A good ROI needs the ideal combination of a strong ads funnel and efficient back end operations to get you the most out of what you have put in.