Awhile back on the FEAD MEdia blog we detailed how to measure your Content Marketing ROI to determine whether your content strategy is generating enough bang for your buck (Hint: if you’re doing it right, it blows advertising ROI out of the water). Today, we’re going to take a look at Social ROI and Monetary ROI and show why your business needs to care about both.
So, What’s The Difference Between Social ROI And Monetary ROI?
When you get down to the basics, both Social ROI and Monetary ROI follow the same formula:
ROI = ((Revenue – Cost) / Cost)
However, determining ROI is never as simple as plugging numbers into an equation then solving for X. Your costs may not simply be limited to dollar amounts. Most likely, your costs also include less tangible investments like:
- Personal Time
- Opportunity Cost
There are myriad risk factors involved in any significant investment, and many are difficult to translate into a direct monetary value. This is especially true in the realm of social media, where your returns aren’t tied directly to a dollar value, such as:
- Changing consumer behavior
- Raising brand awareness
- Reinforcing brand loyalty
- Protecting your reputation
- Discovering new markets
An effective social media campaign is unlikely to create an independent revenue stream on its own (unless you’re running an incredibly popular YouTube channel). However, the increased awareness and brand loyalty indirectly boosts your revenue.
Unfortunately, this makes your variables (revenue and cost) difficult to accurately determine. This is a huge problem for calculating ROI. While it’s certainly possible to measure your revenue before and after a social campaign, you can’t be sure that social marketing was directly responsible for those increased sales.
Plus, social strategies typically don’t have a definite conclusion. You’re not going to suspend your business’s social media activity just so you can derive better numbers to measure your Social ROI, right?
Instead of measuring strictly monetary gains, you need to analyze your social returns. Track social statistics such as:
A successful strategy should steadily increase all of these measurables on your chosen social media sites. Unfortunately, it’s not quite so simple as “more is better.” A Facebook post of yours can go viral, but you may never reap any tangible reward from it. If none of those likes, views, or shares ever convert to sales or clients, then your Social ROI is still in the dumps.
To avoid this, you should aim for increasing engagement within your target audience. Unlike the vast majority of casual internet users, this select audience is far more likely to both engage with your content, and then become customers.
Why Every Business Needs To Balance Social And Monetary ROI
It can be tempting to focus on either Monetary ROI or Social ROI, but you do so at your business’s peril. If you over commit to Social ROI, you may end up overspending on your social marketing budget for followers or likes that aren’t converting to sales. On the other hand, if you neglect Social ROI, your online presence will considerably weaken.
The solution for maximizing your overall ROI is to rigorously track your metrics and consistently calculate your Social and Monetary ROI. This allows you to see where your deficiencies are and adjust your budgets and strategies to compensate.
If you’re interested in boosting your Social or Monetary ROI, get in touch. We can discuss how Social ROI also boosts your SEO, how to reliably calculate digital marketing ROI, and how we can create a social strategy tailored to your business’s exact needs.