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By Kevan LeeMARCH 26, 2015

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The Delightfully Short Guide to SocialMedia ROI

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If the concept of social media ROI feels rather enormous, you’re not alone.

I am amazed—and sometimes astounded—at the breadth of the topic.

So that’s made the exercise of writing a “delightfully short” guide to social

media ROI all the more fun and challenging. I’ve given myself under 1,000 words

to provide an overview of social media ROI and how to apply it to your social

media marketing efforts. I’d love to hear your feedback in the comments!

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What Does Social Media ROI Look Like?ROI has its roots in business finance. Businesses use ROI to calculate the

dollars-and-cents return on a dollars-and-cents investment.

Social media ROI is what you get back from all the time, effort, and

resources you commit to social. And it’s best calculated with dollar amounts.

Of course, there are no dollar signs dangling from retweets or likes. Twitter,

Facebook, and others are no-cost marketing channels to join, potentially a zero-

dollar investment (which makes any return exponentially fantastic, right!).

So in order to track ROI, the key elements would be:

1. Identifying your monetary investment in social media

2. Attaching a dollar amount to your social media goals.

Difficult? Possibly.

Possible? Definitely.

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How to Measure Social Media ROI

ROI = (return – investment) / investment 

This straightforward formula has just the two parts: Return and Investment.

Here’s how to figure out each of the two values on social media.

How to Calculate Your Return

“Return” is one of the trickier elements of social media ROI because it can mean

so many different things to so many different marketers. For instance, we

stopped calculating direct social media ROI at the Buffer blog when our

conversion goals changed.

So first things first: What do you want to achieve?

What is your overarching goal with social media? And how can you specify the

right actions that meet this goal?

Then, how much are these actions worth to you?

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Step one: Choose a goal

There’s a whole host of possibilities for choosing which goals and actions to

track. Troels Kjems at Think Digital shared a great list. Here’s a bit from Troels’s

list and a few of our ideas, too.

New followers

Clicks on link in update

Online purchases

Filled out contact form

Signups for newsletter

Downloads of .PDF file

Time spent on important webpage

Step two: Track your goal

Choose one or more of the above conversion goals, and start tracking. You can

track website actions (sales, downloads, signups) in Google Analytics by setting

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up goals and event tracking. You can track social media interactions (shares,

likes, follows) in Buffer.

Step three: Assign a monetary value

Once you’ve chosen a goal and tracked the actions, it’s time to tackle the

dollars-and-cents side of ROI. There are several different methods to choose

from here:

Lifetime value – How much do you earn on average from a customer? (There’s

a quick calculator here, and a helpful article here.)

Lifetime value, multiplied by conversion rate – How much is each potential

visit worth to you?

Average sale – How much is the average purchase through your site?

PPC costs – How much would you end up paying if you were to use ads to

achieve the same social media actions?

Here’s an example chart from Think Digital about what these values might look

like in a report:

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The PPC costs seem particularly interesting to me. Basically, you compare the

amount you would pay in advertising for a new follower, click, impression, etc.

and extrapolate for what you actually earn via your organic (i.e., not paid) social

media sharing.

If it costs $0.50 to gain a single new fan to your Facebook page, then your

organic gain of 50 fans is potentially worth $25.

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Through experimentation and research with the Buffer accounts we found some

benchmarks that might be helpful for comparison. (You can run a 5-day

campaign with social ads to get a baseline specific to you.)

Facebook like average – $0.50 per page like

Facebook reach average – $0.59 per thousand impressions

Facebook click average – $0.50 per click

Promoted tweet – $3.50 per thousand impressions

LinkedIn – $2.00 per click

How to Calculate Your Investment

While it’s true that participation on Twitter, Facebook, and the like is free, your

time is not. Your social media tools may not be. And your ad spend is worth real

dollars.

Your time – Multiply labor-cost per hour by the number of hours you’ve

committed over a given period (depending on whether you’re measuring social

media ROI for the week, the month, per campaign, etc.). Salary.com found the

median hourly rate for social media managers to be $51. You can also look up

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median hourly rate for social media managers to be $51. You can also look up

salary levels for social media managers in your are using Glassdoor.

Your social media tools – Add up the costs of all the tools and services you

use for social media. Find the weekly or monthly costs using a bit of math

(divide annual fees by 52 for the weekly cost, by 12 for the monthly cost).

Advertising spend – The amount you spend on social media advertising—

boosting Facebook posts, promoting tweets, etc.

All these costs added together will equal your investment.

A quick exampleBig thanks to Neil Patel and Quick Sprout for putting together this infographic

on measuring social media ROI. There’s a specific example in the graphic for

how ROI might look for a fictional business.

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Courtesy of: Quick Sprout

Additional readingHow to Calculate the ROI of Your Social Media Campaigns – Quick Sprout

How to Measure Online ROI in 6 Simple Steps - Think Digital

How to Measure Social Media ROI – Social Media Examiner

10 Questions to Ask When Measuring Social Media ROI – Entrepreneur

Social Media ROI Calculator – Dragon Search

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643 217

How to Measure Social Media ROI – Wikihow

SummaryHopefully this helps show that measuring social media ROI is doable, with a bit

of critical thinking and planning. I love the conclusion that Convince & Convert

comes to:

Figure out what you want to track, where you can track it, think about both

current customers and new customers, and go do it.

What questions do you have about social media ROI? Which methods do you use

to track things? I’d love to hear your thoughts in the comments.

Image sources: Pablo, Death to the Stock Photo, IconFinder, Think Digital,

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Written by Kevan Lee

Content crafter at Buffer. You can find me online, tweeting about my writing process,or at home, second-guessing football coaches. Live simply, give generously, beatcancer.

5 Comments Updates and tips from Buffer

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Brittany Berger • 12 days ago

Loving the short posts! Keep them coming. :) Blog posts have gotten so long and while the information's reallyhelpful, when you only have a few minutes until your next meeting, it sucks not being able to get through a whole

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• Reply •

helpful, when you only have a few minutes until your next meeting, it sucks not being able to get through a wholepost!

2△ ▽

• Reply •

Brian Jackson • 11 days ago> Brittany Berger

Lol I agree... I have had to become a good skimmer lately. No time! 1△ ▽

• Reply •

Doctors Beyond Borders • 11 days ago

Hi, My website has healthcare category, then how can i promote my page in Facebook paid ads? Have you any Ideafor me? http://www.doctorsbeyondborder...

1△ ▽

• Reply •

Ramin • 10 days ago

Great post!

Sometimes the ROI of social media is very simple... like in this case where one of our engineers closed a deal worth$585 in recurring revenue with 1 tweet http://blog.close.io/tweet :)

△ ▽

Aurelie Chazal • 11 days ago

This was a really instructive read. We ran a full on analysis of our traffic / ROI of each channel... last month and were surprised to see that Quora andSlideshare were the most valuable channels for us. Since then we are focusing mainly on these and Quora nowbrings us twice times more leads than it used to.

Unrelated but I was wondering reading the article, if anyone ever benefited from running Linkedin ads. Their CPC isreally high compared to other channels. We tried promoting both our product and content with their ads but hadterrible results. I'd love to hear about anyone else's experience with that.

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Courtney Seiter — We think so too, Kate! :)

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terrible results. I'd love to hear about anyone else's experience with that. △ ▽

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