How to improve your Social Media Marketing ROI

No business would want to invest in something unless it gives a good return. So the question about how to measure Return on Investment for Social Media Marketing is widely discussed. A recent IAB study claims to show a 334% Social Media Marketing ROI. Here’s our best advice on how to measure your Social Media ROI!

Measuring the Social Media Marketing ROI is important and no longer optional. It is needed to justify how your Social media efforts are supporting your business goals.

Social media marketing has developed from being a marketing experiment into a core business strategy. Social media has also developed into a highly valued channel that competes for budgets and resources. This is why measuring ROI on Social media marketing is no longer optional -you need to prove the value.

The beauty with all digital marketing efforts is that everything can be measured. And by measuring everything, you not only prove the return. You also understand which activities that give a high return and learn how to improve results over time.

Internet Advertising Bureau (IAB) recently performed a study of ROI for brands on social media. They concluded with a 3,34 times (334%) Social Media Marketing ROI. But they also concluded that 80% of the audience of the campaign was more inclined to buy the brand and recommend the brand to others than the control group that had not been shown the campaign.

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The power of Social

Social Media Marketing ROI has been probably the most common debates in blogs and discussion boards for some time now. As more companies learn about the power of Social Media Marketing, they’ll naturally challenge the possible rewards for enlarging their current Advertising and Public Relationship strategies.

The primary talking point in the Social Media conversation is that it is challenging to correctly measure results. One of the benefits with Social Media is that everything can be measured, but the challenge is to understand which activity or combination of activities that releases a purchase.

Branding versus sales

While many people think that making Social Media profiles and Blogs only may reinforce a branding campaign, and the effective end result will be increased brand awareness. Others are more focused on online conversions, and tracking all contact points before the conversions take place. From a marketing or sales point of view, it is incredibly hard to ascertain how these intangibles lead to a sale, unless you have the right analytics tools.

The major problem was summarised by Jason Falls of Social Media Explorer: “The trouble with trying to discover Return on Investment for social network is that you are trying to put numerical quantities around human interactions and dialogues, which aren’t quantifiable. Social Media is most effective when you think about other network members as a residential area instead of an audience.”

What is Social Media Marketing ROI?

Social Media Marketing ROI is defined as a measure of the efficiency of your Social media investments, subject to the goals of your business.

The formula used is:
SoMe ROI% = SoMe Net Profit / SoMe Investment x 100

So if you know the variables – the math is simple. The challenge is that a huge part of Social is intangible. And hence difficult to measure. It should be fairly easy to estimate the investment part of the equation. To be able to prove ROI you need to be able to put a value on the net profit as well as the investments. The financial outcome is the culmination of any investment, so the SoMe net profit in the equation has to be quantified as a number.

Anyone that has tried Social media marketing knows that it is easy to measure Social engagement (Likes, comments, shares), reach and clicks to your website. Likewise you can track how a campaign resulted in signups to a newsletter, downloads, sign ups, leads generation and conversions in a webshop. But what is the value of branding and how does your Social media campaign help your overall sales efforts?

The answer to this you will find with analytics while your campaign is running. If all other activities are equal you can assign the delta revenue gain to your social media activities. And as your analytics or your analytics tools improve you will also be able to measure the long term Social Media Marketing ROI.

To put a value on your SoMe Investments, you need to add the cost for labor, software, development and agencies as well as the media cost. In some cases you would need to focus on the delta cost or both.

Why is it important to measure Social Media Marketing ROI?

As we stated in the beginning, no business want to invest in something unless it gives a return. And with most companies, there are usually many competing projects. So if you want to be taken seriously and get a green light on your Social Media investments, it is essential that you can document the return.

Proof is king. Talk is cheap. Nothing will help you convince the stakeholders more than being able to show results through a Social Media Marketing ROI calculation.

And there are many other reasons as well:
1. Aligning your Social media value to overall business goals

2. Allowing you to align strategy with Social media campaigns

3. You get a clear understanding of the value generated compared to investments

4. Analytics will show where your Social media budget have the best effect and which activities provide low ROI and hence what you should do more or less.

5. Enabling you to close gaps in your content production and key messaging

Please contact us at Cloudnames if you have any questions. You can send us a direct email on or simply leave your contact details below and we’ll get right back to you.

Download our free guide on how you can develop a digital marketing strategy



Planning your Social Media Goals

To be able to fully measure the Social Media Marketing ROI you need to set goals that are aligned with your company’s business goals. You need to figure out what key metrics to measure.

If your main goal is to increase online orders in your webshop, you still may want to track lead generation, traffic to your website and many other factors that may lead to increased revenue down the line. Also, you may have other sources of traffic, from search engines, email etc – you should make sure you are able to measure the impact of your Social Media Marketing isolated.

You also need to filter out the organic traffic that would have been there even without your campaign, so establishing a historic baseline and appropriate targets for improvements.

Here are some examples of typical Social Media metrics to measure:

  1. Reach (how many see your ads)
  2. Traffic to your website
  3. Leads generated
  4. Signups and conversions
  5. Revenue generated

You can learn more about how to plan your Social Media marketing in this article: How to make a Social media Marketing plan

Make sure your website is ready

Before you start your campaign you need to make sure your website is prepared. Do you have the right analytics code? Pixels, tags and cookies installed? Is the Landing page for your campaign working optimal? Does it work well on mobile devices and is the loading time less than 3 seconds on Mobile?

It is absolutely crucial that your website performance is up to the task. Remember when you use Social media marketing tactics you are likely to mainly drive mobile users to your website. Usually about 75-85% of traffic from Social media are from mobile devices. Traffic from search engines are still more likely to be from computers rather than mobiles – for now.

Your campaign should lead to a Landing page that is specifically designed for your campaign to maximize the return. You can learn more about landing pages that convert in this article: How to make perfect landing pages for your website.

Website speed is also very important. A recent study by KissMetrics proved that more than 40% of mobile users would bounce if the website load time was more than 3 seconds. You need to think about that like 40% of your marketing budget is thrown out the window if your website is slow. What a waist!

Analysing your performance

Now we are almost ready for the fun part, but we need to decide on and implement the analytics tools that will measure your campaign’s success. All Social media networks offer insights that can be helpful to establish how your campaign is resonating with your audience, your reach, likes/follows, comments, shares and clicks. And also cost per click.

The most important analytics is happening on your website, and luckily there are a lot of great tools you can use.

Here are some tools to consider:

Google Analytics is a must and free to use: Google analytics gives you lots of valuable data, including conversions and Social media tracking. You have a vast set of options and details, and for most companies all you need and more.

HubSpot Marketing: HubSpot offer a sales and marketing suite  that anyone who want to use Social media for marketing should check out. The CRM solution is free – with premium upgrades available. The goodies are in the paid marketing software though – including all your analytics in an easy to use interface.

Hootsuite Analytics: Hootsuite offers brilliant software to simplify the life of a Social media marketer. The basic version is free, and for just a little bit more you get very nice analytics features.

There are many other great tools you can use form Salesforce, Oracle, IBM, SAS, MailChimp and a myriad of other companies.

Let the fun begin!

Now that you have everything in place to calculate the Social Media Marketing ROI, you are ready to roll! You should follow your analytics regularly and adjust if you are not meeting your targets. Regularly means hourly when a campaign start and then at least daily as long as it runs.

Until you have found a strategy that works you should test, test and test again. Our own research shows that tweaking simple elements in a campaign can lead to three times better results (Landing page effectiveness, image, ad copy, CTA’s etc)

You should make sure you always are able to measure the efficiency of your Social media marketing and you will never struggle to prove the value of your marketing campaigns again. You can also let Cloudnames take care of it for you.

What we do at Cloudnames

Cloudnames is a Digital Agency that can help you with everything you need to be your best online. We can manage your complete Digital Strategy, your website, Social media profiles, your Digital Marketing, Sales and Marketing automation and all the complicated technical details to effectively grow your revenue online.

We offer a managed web design service where we manage your website and keep it updated and secure on a regular basis. We can also take care of your Search Engine and Social Media Marketing and all other Digital marketing campaigns you need.

Please contact us at Cloudnames if you have any questions. You can send us a direct email on or simply leave your contact details below and we’ll get right back to you.


Contact us today for a discussion about Digital Marketing


Cloudnames contact us CTA

Sharing is Caring!

At Cloudnames our motto is “sharing is caring,” so we have made a guide on everything you need to know to make a successful Digital strategy. You can download your free copy of our Digital strategy guide here.


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