ROI
Return on Investment (ROI), in the context of social media, is the measurable value or benefit that a business gains as a result of its social media marketing compared to the resources—time, money, and manpower—that it invests in those efforts. It is a crucial metric for determining whether social media strategies are effective and financially viable for achieving business goals. Assessing social media ROI involves answering the following questions:
1.
How much revenue, engagement, brand awareness, or other desired outcomes are we generating from our social media campaigns or activities?
2. What is the total cost of those activities, including ad spend, content creation, social media management tools, and the salaries of the individuals managing those platforms?
3. What is the answer to the first question expressed relative to the second—since we presumably want to be operating in the realm of 'making dollars and cents'?
However, unlike in traditional marketing channels, defining and measuring social media ROI can be complex because not all benefits immediately result in financial returns. For example, we might achieve higher, more meaningful forms of customer engagement, better customer service efficiency, or increased momentum for 'our brand rocks!' sentiment—all of which contribute to long-term profitability but in ways that are not easily tradable for money right now. And when it comes to tracking and evaluating performance metrics that help us get a handle on all this, businesses have a dashboard’s worth of tools at their disposal.
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