Keys to Understanding and Tracking Social Media ROI


social media ROI

Social media return on investment (ROI) always comes up when talking to prospective clients.   Consequently, questions like what is the real value of a Facebook like, or a retweet always come up.  However, when it comes to ROI, “likes” and “retweets” are difficult to quantify because they don’t readily translate into sales.  Therefore, the best social media metrics must track to direct revenue or a verifiable lead.


ROI is ((TOTAL REVENUE – TOTAL COST) / (TOTAL COST)) x 100.  Clearly, from the ROI formula, we must track revenue generated from a social media campaign.  Fortunately, calculating ROI is easy if we are selling a product.  For example, I spent $1000 on Facebook ads promoting my new widget. As a result, I made $1300 in widget sales. My ROI is ((1300 – 1000)/(1000)) x 100 or 30% return on investment. However, when we are generating Facebook leads, we need to convert those leads into sales.

Define Your Social Media Goals

The best social media goals require a prospect to do something meaningful like sign-up for a newsletter, submit a contact form, download an e-book, or a whitepaper. Consequently, those actions require the prospect to submit an email address to get what they want.  The best practice is to build social media campaigns to track a particular social media goal.  For example, creating a newsletter campaign on Facebook, Twitter, and LinkedIn.  However, these social media goals generate leads.  We will need to covert social media leads into paying customers.

Track and Measure Your Goals

There are many tools available to track social media campaign goals, but nothing is better than Google Analytics; because Google Analytics is FREE.

social media tracking

Figure 1.

Now let’s do some simple math.  Based on figure 1, you spent $250.00 on our Facebook campaign.  We had 600 people click on the ad.  Of those 600 people, 275 people completed the form and saw our thank you page.  First, we calculate the cost per lead (CPL) = $250/275 = .91 cents per lead.  We need to know how many people saw our Facebook ad; this is known as ad impressions.  Our ad delivered 5000  impressions to our target audience.  Now we calculate our click through rate (CTR).  Facebook calculates our CTR. CTR = 600 total clicks/5000 impressions = .12 or 12%  Which is really good.  A CTR above 3% is good.  The final calculation is conversion rate (CR).  CR = 275 completed Optin Forms/600 total ad clicks = .45 or 45%.  Ready to learn more about setting up Google Analytics? 

Getting to ROI

Now that we have some leads, let’s look at the ROI formula again.  ROI = ((TOTAl REVENUE – TOTAL COST) / (TOTAL COST)) x 100.  We’ll start working those leads hard with our email campaign. To make the concept simple, we will just work with our original 275 leads.  Our email campaign is enticing your Facebook leads into paying customers.  I’ll mention there are many metrics to consider when evaluating our email campaign.  Check out HubSpot’s article on email analytics to get more familiar with email campaigns.  For example, our total cost of our email campaign is your Facebook ad spend + our time to create email messages +  the cost of our email platform = $300.00.  Your hard work won 2 paying customers totaling $800.00 in revenue.  Therefore our ROI is (($800.00-$300)/($300)) x 100 =167% for our Facebook campaign.

Interpreting ROI

Interpreting ROI is simple, anything positive is good, meaning we recouped your investment and made a profit.  A negative ROI means your investment lost money.  In our example, our ROI was 167% meaning for every dollar you invested you made a $1.67!  Let’s say, our ROI was 10%, then you made .10 cents for every dollar spent.  Likewise, if our ROI was -25%, then you lost 25 cents for every dollar invested.


Calculating social media ROI is simple when you are selling a product that customers can purchase directly from your e-store.  If your business is a service, then your social media campaign will generate leads which then will be converted into sales.  We are experts at setting up social media campaigns and turning your investment into positive ROI.

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5 Smart Ways to Use Business Videos on your Website

Business video;video;video;seo

Any company can benefit from using a business video on their website or social media.   However, many owners think their business video needs to go viral or be a Hollywood production to be effective. The sad thing is entrepreneurs miss opportunities to engage with their audience by publishing a simple business video. Here are 5 ways to use video in your business.

Create a short value proposition video for your website.

People need to know why they should buy from you.  So tell them with a business video. Your value proposition is a compelling reason why your business is the better than the rest.  In Michael Skok’s article  4 Steps To Building A Compelling Value Proposition Skok provides clear guidance on how to craft a compelling value proposition. The most powerful way to do this is for you to be in front of the camera telling people why they should do business with you.

Use video to train new staff.

Show and tell is the best way to train staff. But, not every topic is suited for a business training video.  The most impactful business training videos are reserved for important, and or complex topics.  Business training videos done properly are extremely effective because employees learn quickly and fewer mistakes are made.  Here is a great article from iSpring, 6 Tips to Create Engaging Training Videos.

Use quick video tutorials to help clients understand complex topics.

Using video to explain complex ideas or processes helps people understand what you do, or how something is done. For example, we helped a personal injury lawyer develop short explainer videos on the filing process of a personal injury claim.  The video was powerful because people knew what to expect, and that made things go smoothly.

Use video to bring testimonials to life.

It’s better to have other people praise you than to praise yourself.  Having written testimonials are good.  But having a sincere video testimonial is powerful.  People are willing to say a few kind words on camera when your product or service is great! So ask your best customers to help you with a simple video testimonial.  The added bonus is that people watching the video testimonial feel like it’s a friend telling them about a good deal, even though it’s a stranger!  WOW!

Use video to make yourself more visible in search engines.

Google loves video because they own YouTube.  That’s why Google’s search algorithm prioritizes video.   Therefore using business videos will improve your SEO rank.  Making a great video is the first step, the second step is to post your video so that it will be easily processed by Google.  Check out this great article to get you started: 12 video SEO tips to help improve your search rankings

Using video is easier than ever, just grab your phone and start recording.