Why measuring the ROI of social media is so hard


For businesses, especially small ones with tight budgets, social media often feels like an unnecessary expense. The reason is that the ROI, or return on investment, of social media is hard to measure.

The reality is that spending time on your business’ social media, or having a professional social media manager do the work for you, does pay off for businesses. Over time, your business will earn the trust of people who interact with you online.

  • Social media builds brand awareness.
  • It helps you reach out to customers who might otherwise never hear about you.
  • It’s like the new word of mouth.

The most important thing to remember is that social ROI is not just about the initial sale. Social media has the ability to impact customers throughout their entire relationship with your company, and your budget, plan, and calculated ROI should reflect that impact.

Source: Simply Measured, The Social Marketer’s Guide to Social Media ROI

There are several factors preventing marketers like the team at Legendary Social Media from being able to present businesses with a reasonable ROI for their social media efforts. Let’s look at the biggest obstacles.

Seeing the ROI of social media is a long-haul game

  • The reality is that it takes months for most businesses to see their social media activities pay off. And, within those few months, the majority of the pay off happens online only, with:
  • more likes on your page
  • better post reach
  • higher post engagement rates
  • easier organic likes

And, like with global warming, the modern human doesn’t like to play the long game, no matter how winnable it is.

In fact, there is indeed a real and measurable ROI of social media. Like many aspects of a business, it just takes time to build!


We need to track attribution

Attribution refers to tracking where your customers came from. Did they see you on Facebook, then go to your website, then hit the buy button? Or maybe they found you on Instagram first, then stopped in at your store a month later.

Because your customers’ buying activities don’t happen in a direct line from social to sale, attributing an increase in sales to social media is tough.

If we can identify which action moved a potential customer from one stage to the next, and which activities support other actions, we’re able to build an attribution model that doesn’t single out one tactic that takes all credit, but rather one that helps us understand which actions facilitate different parts of the customer’s journey.

Source: Simply Measured, The Social Marketer’s Guide to Social Media ROI


Google Analytics can help

Connecting your website to Google Analytics is a major step towards seeing which social media networks are sending the most traffic to your website.

Keep in mind, though, that because your customer’s buying journey isn’t linear, Google Analytics doesn’t show the whole picture of how that customer came to make a purchase.

Here’s how to do it.

  1. Sign in to Google Analytics
  2. From your dashboard, go to Acquisitions, then click Social.
  3. From there you can see which social networks sent people directly to your website.

Of course, that doesn’t tell the whole story (as we said earlier), but it’s at least a part of the picture.

Social Media Examiner’s guide shows you how to measure the basics of social media ROI and recommends using Google Analytics (Legendary Social Media recommends Analytics too!).


Why is it important to measure the ROI of social media?

As business owners, if we don’t see any payoff from the activities we do, or for the services we pay for, why would we keep it up?

That’s why measuring the ROI of social media is important. We need to be certain that our efforts are paying off, plus more.

  • You’ll see where you can improve your efforts
  • You’ll be able to decide which social media channels are bringing in the most revenue for you
  • You’ll see how specific changes impact your social media goals

Source: Sprout Social, Social Media ROI Guide


Measuring the ROI of social media is possible, and worth it!

Marketers haven’t perfected the approach for measuring the ROI of social media yet, but we’re getting close with tools like Google Analytics’ UTM links and other software that can track how traffic comes to your website, and your storefront.

Before we do perfect the art, businesses should be aware that there are so many amazing benefits to being active on social media.

  • It builds brand awareness
  • It can provide backlinks to your site from other businesses that discover you online
  • It builds word of mouth about your business, which spreads fast
  • It builds customer loyalty over time

Do you struggle with measuring the ROI of social media? Share your comments below or email us!

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