red balloon social media is a results-driven agency, so it’s no surprise that social media ROI (Return on Investment) is a hot topic for us. More than anyone, we understand why clients place such emphasis on this number; it means understanding how much your getting back (awareness, reach and money) for the investment of their time and money. Having this transparency is crucial when it comes to what’s working with your social media marketing efforts.
How to Calculate Social Media ROI
Most companies don’t understand how to calculate return on investment. Calculating social media ROI requires a fairly straightforward formula, but before looking at actual figures, you’ll want to either estimate or look at historical data to figure out the lifetime revenue that you stand to generate from a particular campaign. For the sake of simplicity, we’ll be using round numbers in this example. In this case, let’s use $10,000 for the amount of revenue your next campaign will likely to generate. Next, subtract your costs; again, keeping it round, we’re using $2,000 (this includes your ad spend, and the time you, your employees and/or vendors cost you to implement the campaign). Then, multiply this number by 100, and then divide it again by your costs ($2,000). For those of you who are better at visualization, we’ve broken out the formula below using our hypothetical figures.
$10,000 (lifetime revenue) – $2,000 (costs) x 100 / $2,000 (costs) = 400% ROI
See, not so bad! This example would reflect a campaign that resulted in a 400% ROI, meaning that you made 400% back on your investment.
Now, if you are really running your campaign as a branding exercise, you might want to look at this a little bit differently than a revenue generating exercise. In fact, you might want to compare it to an equivalent to how much you would pay for the same impressions on a billboard along the highway. How much would you pay for the same number of impressions of people driving by your billboard?
There are a few different considerations (all unique to you), such as your:
We understand the complexity of this, so if you have questions, visit us here or give us a call at 480.570.5395. We would love the opportunity to discuss how to best achieve your social media success!