You know everyone thinks we’re crazy, right?
To most people, social media is a joke.
You can’t make money with it. It doesn’t help your business. It’s a hobby, a diversion, a fad…and most of all, it’s a big fat time waster.
Or is it?
Is it possible to get a direct return on investment (good ol’ cash) from social media?
Well, if there wasn’t potential…companies like Facebook wouldn’t be worth 200 billion dollars.
So let’s look at this thing called social media ROI.
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It’s what you get back from all the time, effort and resources you put into social media.
And it’s best calculated in dollars.
If you want to track ROI, you’ll have to…
- Find out how much money you invest in social
- Put a dollar figure on your social goals
Of course, to get the fancy percentage those nerdy analysts talk about, you have to do math like this:
ROI = (return – investment) / investment
“What’s the ROI of X, Y, Z? …It depends.” – Gary Vaynerchuk
What he means is, this whole subject could get really complicated if we let it. (But let’s not let that happen, okay?)
Here’s why most people think there’s no ROI in social media.
Rand Fishkin of Moz has a picture (with a caveman on it) that says:
“Me make content. Humans click. Them buy. Me get money.”
Wrong!
…As Rand points out.
In the real world, he says it actually works more like this:
Me make content. Humans click. If them like, them remember. Maybe them see more stuff I make. Visit again. Humans start trust me. Them buy.
…As you see, we have a whole lot of things we could measure.
Here are some these things you could look at:
- New followers
- Clicks on a link in a post
- Online purchases
- Filled out contact form
- Signups for newsletter
- Downloads of a .PDF file
- Time spent on an important webpage
Which of these do you want to look at the most? Choose one of these and start tracking.
Google Analytics is great for measuring website actions (sales, downloads, signups).
But how can you track things with social media?
Twitter Analytics is a great free tool for Twitter.
And for a whole lot of links I put on social media for clients, I paste the link into this handy “URL Builder” tool from Google:
https://support.google.com/analytics/answer/1033867?hl=en
…You have to scroll halfway down the page to use this weird but useful tool.
Simply fill in the form fields marked with an asterisk and click “Generate URL.”
It spits out my original link, but with an awfully long bunch of code stuff at the end.
I’ll copy this whole mess and paste it into bit.ly to get a nice, short link again.
A link that even fits into those tiny tweets.
Why do I do all this?
Google Analytics.
Clients can see instantly that I’m sending them traffic. And then they can actually measure how much that traffic’s worth.
Hey, I’d better go check this now. I may need to raise my rates. (Wink.)
How To Calculate Your Investment
While social media is free to use, your time is not.
What’s your time worth?
(That’s why people hire social media managers.)
But if you’re a single parent, desperately working away in your basement apartment (between diaper changes) …and hiring someone is out of the question…
Know that your time is valuable!
You don’t have to work in the corner office at the top of an ivory tower to put a high value on your time!
Do you know how much your time is really worth?
And those social media tools? Many are free, but some cost money. Add that in too.
And then there’s advertising spend (if you do that.)
The Oft-Misunderstood Value of Your Goals
All of those goals (new followers, clicks on a link, etc.,) lead toward one thing – customers.
Are customers only worth the average sale amount – the $9.95 ebook you sold them?
I think they’re worth FAR more.
Customers have a lifetime value. How much do you earn, on average from your customers?
Here’s a calculator:
http://customerlifetimevalue.co
You might want to multiply lifetime value by your conversion rate (how many people visit versus how many buy.)
And again, if you’re paying for ads, be sure and factor that in.
How To Put This All Together
And there you have it. A way to calculate your investment – and your goals.
As the days go by, compare your investment with your progress toward your goals.
If you’re a visual person… (there’s probably smoke coming out your ears by now) …so here’s a handy infographic on social media ROI by Neil Patel.
The Real Reason I Wrote This Article
I felt like I had to say all this.
I love social media. And the only way this whole field can move forward…is for all of us to share what we learn.
I’m hoping that I can do more than merely inform. It’s my goal to inspire you to reach for your business targets and dreams.
(Of course, I love to get paid for using social too.)
I just want more people to know that you CAN make money with social media.
Let’s change that, okay?
Marty says
Great, thanks for this share. Social media is the best that you can have to build your website popularity and audience. They are a big platform for building your reputation online.
John Martin says
Marty, thanks for stopping by and commenting! Yes, social media is a huge help in building an audience and reputation. I’ll be posting more about how to get more out of it in less time.
Thanks again!
-John
Mohit says
Social Media ROI is definitely an important factor.
By getting more shares, we shall be able to make our blog posts popular.
Good number of shares may even boost the search engine rankings.
Social media marketing is one of the topics I regularly cover at my blog. The reason for it is that everyone loves to read about it, even if not involved directly.
I have even seen brands giving more value to blogs having good number of shares and comments.
John Martin says
Thanks for stopping by and commenting, Mohit!
Yes, social shares definitely raise blog popularity, and this is a great ROI and SEO goal as you point out. Roundup posts definitely help increase social shares for new bloggers. (Will be working on getting one out there myself.)
Best,
-John
Amar kumar says
Hey John,
Glad to read your wonderful post,
It is big truth we cant make money by taking the help of social media and it plays a vital role to grow our business in positive manner.
Google analytic is great tool in respect of traffic to website. I have found in your post you have used very simple method to make us understand about social media ROI. I also love too social media due to its extra ordinary features and they are very beneficial for us in sence of business and blogging.
Eventually, thanks for sharing your valuable post.
With best regards,
Amar kumar
John Martin says
Hi Amar,
Thanks for commenting, and for your kind words! Wish you success with social media, and I hope to share more things to help you along the way.
Best,
-John
SocialTech360 says
Segmenting how your different social channels are performing is great advice. Re: ROI, what formulas can one use to measure the return on investment from social campaign activities?
John Martin says
SocialTech, thanks for stopping by to comment!
As Gary Vaynerchuk and Rand Fishkin (recognized experts) point out, as quoted in my post above, there’s no simple math formula for ROI on social media campaigns.
But if I understand you correctly, I’ve wondered the same thing: How do you convince others (or yourself) to invest money in social media if there’s no clear-cut way to see the results of your investment? (Please let me know if I’m understanding you right.) I am hoping to write a post about this soon!
Thanks again,
-John
CricketShaukeen says
Great, thanks for this share. Social media is the best that you can have to build your website popularity and audience.