Just like in other marketing strategies, money also talks in social media marketing. Whether doing frequent posting, establishing engagement in the audience and customer-related performances, any activity done regardless of the social media platform that is using must ensure that it can bring returns and profits to any ventures exposing in.
This may sound easy, but it takes a lot of adjustments, measurements and strategy shifting tactics to ensure that the current marketing efforts are doing well in social media. Moreover, there are cases that using more than one method has to be done in order to maximize the social media marketing efforts for a wider exposure and better engagements as well. The ability to explore and know the right tools and formula must be done because through the return of investment (ROI) , it will be more visible to identify what technique is working well and what is not. This can be an indicator to know if changing the strategy and what kind of tactic must be executed.
Before knowing the ways to measure the ROI of any social media marketing tactics, it is also essential to know the dynamics of ROI and its importance to any organization especially in making marketing approaches.
In choosing investments and projects to consider, aside from the strategies and priorities that need to look out for, the so-called Return-of-Investment (ROI) is another factor that needs to study and should include in making decisions. And unfortunately, people struggle to know and learn its dynamics, also failing to explore the potentials ROI can give convenience to them. Failing to learn about this tool will create more confusions as if is this should even be considered, or if it is used appropriately or incorrectly.
This article will provide some basic knowledge about this tool, aiming to help potential users to make out of it without additional stresses and uncertainties.
What is ROI?
Popularly known as return of investment, it is a financial meter that is used to assess and see an investment’s profitability. By this it means how much income can be generated from a certain venture.
Generally, ROI is the ratio of the net income from an investment which is turned into the percentage from the total investment expenses.
Why is ROI Essential?
In a society where “money talks”, learning ROI has been mostly used by people and even organizations before spending their hard-earned money for further investments with the hopes that they can get better yield from doing it.
Knowing the subtleties of ROI is a good way to evaluate the extent of the net income that can be gained to a particular investment. Furthermore, it also helps a person to compare and be assured of a higher potential financial gain from a certain venture.
Whether launching a new project or selling a property, ROI has been an important criterion in ensuring that people will get positive results in considering to take their risks from it. This has also been another determinant of an investment’s success if it is able to prove that it can give better ROI to its potential investors.
What are the Factors that make ROI popular?
Knowing ROI is already been a needed factor in any business, and the visible it can be seen, the higher the chances that a particular venture will be considered by potential investors. Along with this, there are other attracting benefits of using this method:
- ROI is not a technical and hard-to-understand financial terminology anymore. In fact, people who can be able to present it also provides a clearer definition and language of what a particular is about and how can it benefit its stockholders.
- Compared to other methods, ROI calculation is applicable to any type of investment, making it very flexible. As long as a venture has a cost, it can surely have a guaranteed net income.
- Since the general idea of ROI is that if a negative ROI means an investor loses money and a positive one means gaining more, people think that it is that simple, however, knowing ROI is more than just positive and negative matters on the investment.
- ROI also serves as benchmarks in determining how well the investor’s venture is doing. With this, it can help the stockholder know what areas of the business must be maintained or improved.
How to Calculate ROI?
Generally speaking, ROI can be calculated as:
ROI = 100% * net income / cost of investment or ROI = 100% * (gain of investment – cost of investment) / cost of investment.
This may look very easy to do, but there are further calculations involved before reaching this formula. That is why there are various ROI models used and furtherly improved to make ROI calculations easier and more accessible to anyone.
The Social Media ROI
As mentioned, ROI stands for return of investment. In social media marketing perspective, ROI is the total value that can gain from any social media marketing activities made. It can answer the question “how much”.
There are various measurable things in identifying the ROI aside from the monetary aspect. For instance, if the company is aiming for awareness of its product or service, its social media ROI is determined not on monetary profit but in terms of audience reach and engagements.
The Importance of Knowing the Social Media ROI
- Measuring the social media ROI can help identify the social perspective in the organization, and what can it do to furtherly improve the perception of the audience regarding them.
- It shows where the resources, actions and efforts are being used, and where can it also be effective.
- Aside from knowing where the sources can be used, it can also identify where it is wasted, if there’s any.
- Knowing the social media ROI helps the organization to understand more the pulse of the audience, and can make adjustments from here, if needed.
How to Measure the ROI
Identifying the return from social media marketing can be done using the following steps:
- Define the goals or intentions in doing social media marketing.
Some of the measurable goals to be considered are:
- Creating awareness about the product/service
- Increase the website traffic
- Invite and produce new leads
- Have new influencers
- Generate sales
- Prepare a timeline in attaining these identified goals.
By doing this, be realistic and avoid too much pressure. With every strategy or campaign to use, there are different periods of time before seeing its results, so it is essential to be very particular on this. Avoid setting timelines that’s impossible to achieve.
- Still basing on the goals, construct social media strategies.
Another importance in knowing first the goal is that the actions and efforts can also be identified. By doing so, the tendency to have wasted efforts especially in the resources will be lessen.
- Use metrics to keep track if goals are met
Surely not all of the goals can be easy to recognize if it is already been achieved. There are goals that need thorough check-ups and monitoring to ensure that the strategies are still in-line on the goals. This is where tools called metrics come in.
- And once you have those metrics, always have them monitored.
Regardless if the goals are still aligned on the set timeline or not, keeping the social media metrics monitored and evaluated is still essential. Remember that many of the social media aspects can change even in just a blink of an eye, so it is important to regularly check what else is going on, and where can you gain more when it comes to ROI matters.