Spend smarter, not harder
Measuring return on investment for your social media spend
Part one of a two-part series on that most elusive of questions: “I know my company needs to be on social media, but is it worth it?”
Do all those Facebook likes matter? Is that drop in Twitter followers a bad sign? Are the comments on your LinkedIn thought-leadership piece meaningful? Why did last week’s Instagram post, which took five hours to create, get fewer impressions than this week’s five-minute meme-job?
And most importantly: does any of it affect the bottom line?
If you’re stuck with more questions than answers, you’re not alone. In 2017, measuring return on investment (ROI) in social media was the top concern for 60% of marketers surveyed. In a 2019 industry report by Social Media Examiner (SME), 90% of marketers are looking for the best ways to measure and analyze social activities.
The social media marketplace is huge, and getting bigger each year. Worldwide, an estimated 2.77 billion people used social media networks in 2019. In some prime demographics, online media in general has already outpaced more traditional pastimes: according to a recent Nielsen report, American adults aged 18–49 spent more hours per day consuming online media than watching television (keep in mind that this is all online media, of which social is a part, but it’s still an eye-opener).
The competition is also out there. Worldwide, social media advertising spend is estimated at US$98 billion in 2019 alone. This doesn’t even take into account the organic content that marketers are trying to create.
So, how do you ensure your social media efforts don’t just get lost in an ocean of content?
What do you want to achieve?
When you’re calculating your ROI on social media, it is essential to know why you’re in the arena—what do you want to achieve?
You can start with the easy task of getting your brand known. In fact, almost 90% of brands use social media for raising brand awareness. However, this is the online equivalent of an old-fashioned billboard—then, as now, this type of campaign is easy to execute and can make your brand highly visible, but it’s hard to measure in terms of its effectiveness. The difference today is that, especially for B2B brands, social media’s ability to target a specific audience is particularly attractive if awareness-building is your goal.
But beyond that, your goal could include bringing in more website traffic, improving search engine rankings or converting customers.
The SME report found that 93% of all marketers said their social media campaigns generated more exposure for their brand, helped increase traffic (87%) and generated leads (74%).
Without a social media strategy that ties to your business goals, assigning a monetary value to your social media ROI could prevent you from understanding its true value.
For instance, while it is possible to put a monetary value on the likes and shares on your posts, it probably wouldn’t be a true measure of whether these users are actually choosing your product. Likes and shares are more useful when you want to measure your reach (i.e., how many people saw your post online).
If your product or service is a relatively simple transaction, you can draw a direct line from social interactions to website visits to online purchases, quote requests or similar activities.
However, if your sales cycle is longer and more complex, consider other measurements, such as gathering email addresses for leads or driving registrations for webinars.
The first step: Setting up your social media strategy
The returns on your social media marketing depend on your social media strategy and how you execute it—using tools creatively and knowing your audience.
While most businesses are aware that social media is something to get into, only 34% of organizations feel they’re able to connect their business outcomes with their social media goals.
Your social media goals have to tie neatly into what your business is all about. Take for instance UK-based telecom giant BT, which used social media to enhance their customer service.
BT created a holistic social media strategy that had different goals for Twitter, Facebook and YouTube, as well as a community forum, with each one cross-promoting the other. Their social media team tweeted about service outages and related issues, marking their social presence with important, useful information. Facebook was used to post news and promotions, and address customer complaints. Customers could access informational videos through BT’s YouTube channel, which covered topics such as billing or setting up a router. The community forums served as an additional resource for customers to share complaints, resolve issues and advise one other.
This strategy drove BT’s customer service improvements, and built brand loyalty and trust among customers. The company cut down on call centre costs and saved £2 million per year on customer service.
A social media strategy consists of one or several goals, and some of these goals may be different across platforms. Most social media goals can be categorized into four areas: brand awareness, engagement, conversion and post-sales customer retention. These steps could help shape your social media strategy:
- Figure out your objectives: Think about business objectives. Do you want to increase sales, highlight how your brand is different from competitors or improve customer service?
- Set actionable goals: Convert your objectives into specific, quantifiable goals. To increase sales, your goal might be to drive 50 email sign-ups per month. To improve customer service, you could focus on reducing social media response time to three hours by the next month.
- Choose platforms and tools: Figure out which platform works best for specific goals, and adapt the tasks for each goal to each platform. If you want to drive traffic to your website, you could focus on Facebook posts; to attract customers with a visual showcase of your products, you could work on improving your Instagram page. You may also consider buying contact information for targeted groups from platforms such as LinkedIn, in which you can communicate directly with prospective customers.
- Test and analyze: Test your strategy live to find the weak points (and there will be weak points), then determine how to fix them.
The next step: What kind of metrics will you focus on?
Knowing what to measure is half the battle (the other half is figuring out what it all means).
Depending on the goals of your social media strategy, your metrics will likely fall into the following four categories.
Building brand awareness
At this stage, you have a wide net of possible metrics, including mentions, shares, likes and impressions. You can study how quickly you gained followers or likes, and analyze the gains to find out which activity caused an uptick. This helps you determine what kind of content works with your audience, what’s the best time to put up new content and how many audience members actually see your post.
Example: Peel makes functional, attractive phone cases. As part of its social media strategy, the brand focused on creating an Instagram feed showcasing its products and reinforcing its brand story. Along with this visual strategy, Peel advertised on Facebook and engaged in efficient customer service. For a brand that is relatively new and competing with bigger retailers, the company tripled its ROI within two years.
You can find out what percentage of your audience approves of or engages with your content—just add up all the likes or shares on a post and divide it by the total number of followers, multiplied by 100. On the other hand, a post’s virality can be measured by dividing the number of shares by the number of impressions, multiplied by 100.
Example: Fashion brand Wholesome Culture promotes its ethically made clothing line through social media engagement. The brand uses Instagram more than other channels to share trendy posts that include its products, topical memes and healthy-eating tips. While not directly selling its products, the brand engages with its target audience and acquires more potential customers.
Converting leads into customers
For a paid ad campaign (such as Google Ads) or promoted content (Facebook or Twitter), your performance stats are presented on the platform’s dashboard. For organic content, a more actionable (and therefore, easily measurable) social media post might include a link to your website and a call to action. At this point, you can measure the click-through rate, the cost-per-click for ads and the bounce rate. A lower bounce rate and higher click-through rate would mean that your post is more relevant to your audience. But the more important metric would be an actual engagement with your content, such as signing up for a newsletter, getting a quote or registering for an event.
Example: Most businesses use Google’s behavioural targeting to reach out to customers and potential leads who use its search function. This helps bring customers to local businesses such as Harris Teeter, a North Carolina–based grocery store. With the help of geographic targeting and engaging content, the grocery store was able to bring 15,000 people to its store, drive more than 25,000 conversions and double their Facebook reach over six months.
Creating a better customer experience
A holistic social media strategy would not leave out existing customers. Your metrics here include an analysis of reviews, comments, endorsements and posts mentioning your brand. The numbers matter, but the content of these comments and posts matter more. You can also create surveys to measure net promoter scores and customer satisfaction.
Example: A lot of major brands dedicate a separate account or page on social media to customer service. Nike, for instance, is said to have one of the strongest customer service accounts on Twitter: Nike Support. This account provides support in seven languages with an impressive response time, seven days a week. All a customer has to do is @mention the brand, and Nike’s social media team jumps in to help.
How brands across industries use social media
Success in social media does not have to depend on the industry. With the right content and strategy, marketing through social media can bring any business huge returns.
Entertainment, fashion, food, travel, tech or any other visual-heavy industry may have it easier on social media, given the focus on visuals. Product designers keep social media in mind and put an artistic spin on products that may have never had to look pretty before. This explains why Instagram is experiencing a sudden burst of new sparkling rosé brands, enticing home décor and even aesthetically coloured, Instagrammable nutrition pills. However, it’s also responsible for a higher competition among these industries, as brands get increasingly creative to look unique.
Instagram has become a favourite among marketers for brand promotion, and the platform has made it easier for direct selling and promoting user-generated content. Furniture stores such as Wayfair or IKEA can tag multiple pieces of furniture in one photo with the shopping feature; travel brands can engage with their audience by reposting user-generated content. Indeed, Instagram came up as the second-most important platform, just behind Facebook (used by 94% of marketers), in the 2019 SME report. Instagram is being used by 73% of marketers, and 69% plan on increasing their organic activities on the platform in the next 12 months.
B2B: Social selling
Industries that don’t have to attract visually on a product basis—such as those B2B companies that are providing professional services, SaaS, expertise, etc.—focus instead on creating engaging content and generating leads through social selling. The concept of social selling is a contemporary spin on cold calling. It involves combing through social media channels, engaging in social media conversations, identifying potential leads, and reaching out to them to build a relationship and solve their problems. Unlike cold calling, social selling is more relevant and personal; you only reach out to the decision-makers who are the best fit for your products or services.
LinkedIn is one of the most popular channels for social selling—it’s also the most-used social channel among B2B marketers. And, according to LinkedIn Sales Solutions, it’s a strategy that works: 78% of those who engage in social selling outsell their peers and 51% are more likely to hit their quota. LinkedIn even aggregates your social selling index, providing tips and resources to improve it.
Caveat for social media metrics
Finally, don’t forget that, no matter how tightly you try to measure ROI on social media, there are a few analytics that can seem either alarming or exciting—but that have to be considered as part of a much bigger picture.
- Impressions can be misleading: If your post has 200 impressions, it doesn’t mean 200 people viewed it—it could also be that 50 people saw the post 4 times. Impressions may be an enticing metric, but they should be considered in the context of the number of likes, shares or the reach of the post.
- Engagement rates are different across platforms: Don’t be alarmed if you’re getting less than 1% as your engagement rate on Facebook but a higher rate on Instagram. Numerous studies cite engagement rates on Facebook and Twitter to be between 0.5% to 1%, while Instagram ranges between 1% and 6%. Set your goals based on what’s considered appropriate to the platform.
- Likes and followers don’t matter in the long run: To an extent, likes and followers can seem like important metrics. But if your business has been on social media for a while, these can turn into vanity metrics, as likes don’t necessarily mean more customers. Fleshing out a strategy that includes goals for higher reach and customer conversion is the next step.
In the next article, we’ll explore tools that measure ROI, what counts as investment and costs, and how to assign value to metrics.