Mandy Boyle

Measuring the ROI of Social Media

Measuring return on investment is important for any marketing strategy. When one places an ad, issues a coupon code, or increases exposure through guest blogging, he or she wants to be able to see what kind of return is resulting from the effort. In social media, ROI can be difficult to calculate. After all, how can something so subjective be equated with a concrete number? The key to calculating ROI in social media is to use a variety of metrics. When one looks at the whole picture concerning social media, it’s more than just numbers.

Before you can start calculating ROI in social media, it’s important to take a look at your current social media strategy. What are your goals? In your opinion, how can success be measured? How do others measure success? By having a clear picture of your current strategy, it’s easier to take a look at the data that you do have in front of you and extract something meaningful.

Then it’s on to metrics. Metrics or key performance indicators are the traditional means of measuring ROI in social media. We look at things like:

• Increased traffic to your site
• Increased sales
• Increased lead generation
• Time on site
• Number of external links
• Number of active members in a community
• Number of friends or followers
• Number of comments on a post
• Retweets/Shares

But there are also intangible metrics that come into play and these things are much more difficult to recognize when you’re looking at raw data. Things like:

• Quality of the conversations about your brand
• Sentiment
• Quality of the fans or followers

So with intangible and tangible metrics coming into play, how can one ever calculate return on investment? It’s not always easy – but it’s definitely possible.

One of the key myths concerning social media ROI is that social media is free, therefore, the traditional formula of ROI (ROI = (X-Y)/Y where X is final value, Y is starting value) does not work. But social media isn’t free. It takes people, time, and tools to utilize. So how can you begin to measure when you don’t even know where to start?

Try taking a look at Oliver Blanchard’s Social Media ROI Presentation. It’s an easy way of breaking down the social media ROI formula so that it becomes real – not just a buzz phrase. He even gives step by step instructions:

1.) Establish a baseline so that change (in revenue, cost reduction, traffic) can be observed as a result of social media efforts.

2.) Create activity timelines so that each action corresponds with a date and/or time. When you’re looking at Google Analytics data and see that traffic peaked on a certain day, use the annotation function to see how it corresponds with your activity timeline.

3.) Look at overall revenue, both before implementing social media and after implementing social media. Is there a change? If so, what is that change? You can also look at metrics like the number of transactions or number of new customers.

4.) Measure the precursors to transactions. Was your brand a trending topic on Twitter? Did you have an increase in conversations on your Facebook page? Check your activity timeline and see how it corresponds with the changes you’re seeing. Curious about sentiment? Try running a report on to see if positive mentions around a certain time resulted in more sales or more traffic. Same thing with negative mentions – did it result in fewer transactions?

5.) Then, take a look at all of your timelines. You have activities you’re tracking, web analytics data, transaction data, and even sentiment metrics from tools like Overlay all of the timelines.

6.) Look for patterns. If you implemented a social media event, see if it corresponds with a pattern of change. If it does, that’s great – it’s one step closer to calculating ROI. If it doesn’t, go back and look for other patterns or consistencies.

7.) Prove the relationship. It’s usually a process of elimination, but you need to look over all of the data you have to see where correlations may lie.

This is looking at calculating social media ROI in a very big picture way. But if you’re looking to get down into the nitty gritty and want to be even more specific, here are some additional things you can use to see where your social media strategy is getting a return:

Trackable URLS: HootSuite,, TweetMeme, and countless other social media tools allow for you to use shortened URLS that can be tracked. As a result, you can see how many of your Twitter or Facebook followers clicked through to a blog post you wrote or a product you featured.

Facebook Insights: Facebook’s built-in analytics program is another way to analyze the performance of a Facebook business page. Facebook Insights help you gain information about your community and how fans engage with your page using an interface that’s similar to other web analytics programs.

Google Analytics: As I mentioned above, the annotation function is your friend. Make notes where social media events occur and see if there’s a resulting change or pattern. Also reference other marketing events to get a better big picture view. Also, in GA, you can take a look at referring traffic and resulting revenue from that referring traffic to see if your social media profiles are driving sales.

Sentiment Analysis: Take a look at tools like, Twendz, Tweet Feel, or Viral Heat. Some of these tools are free, others are paid. Either way, you’ll be able to sort through the “noise” of all of the conversations to see what sort of sentiments are surrounding your brand. Sentiment will allow for you to see the patterns in behavior surrounding your site. For example, does site traffic increase when you post a “Good morning!” message on Twitter?

Community Metrics: Is your Twitter or Facebook community size growing? Are there more conversations happening? Have you been able to gain valuable feedback from your social media postings? These community metrics are easy to observe and understand. If you see a growing number of fans and followers, increased engagement, etc., it’s likely that you’re doing social media the right way. As for falling numbers and silent fans, those can tell you a lot too. They can tell you that something you’re doing isn’t working, and that can be just as valuable as any other success metric.

How do you measure your social media success?

One Response to “Measuring the ROI of Social Media”

  1. Ashley says:

    Thanks for including Viralheat! We’re proud of our sentiment analysis feature and are glad you like it too.

    Feel free to reach out with any other questions you have!

    Thanks again,
    Ashley (@shley_g)
    Viralheat Community Manager

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