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Maximizing the ROI of Social Media Advertising

Maximizing the ROI of Social Media Advertising is a guide that provides actionable tips and strategies to help businesses get the most out of their social media advertising campaigns.

Social media is now not just a place to connect with friends but also to build loyal customers and attract new ones. Using social media, many brands have seen exponential growth in their sales and have had a positive ROI.

While some marketers find it difficult to gauge the direct impact of social media on ROI, but some are able to connect the dots. As per a survey by ListenFirst, 14% of respondents can tie their social media efforts to ROI.

Once social media marketer understands how to measure ROI for the efforts going in, they can create strategies and goals that hit the business target.

Using this blog as a playbook, any marketer can maximize social media advertising ROI using the tips and tricks, and best practices mentioned here.

So, without much ado, let’s get started.

Factors that Impact Social Media ROI

Social media platforms are full of metrics like engagement, followers, impressions, and more. They do a good job communicating the daily interaction with the users but can’t be used as a single most factor that impacts ROI.

There are a set of factors that dig deep and directly impact the ROI. Here are the four most important factors:

1. Budget and ad spent

A well-planned budget plays a great role in ROI. How much money needs to be invested, and where are the two questions a marketer should address.

There are possibilities of seeing a low ROI after investing a good amount on a particular platform. So, spending a lot is not the point but spending strategically is what helps to scale.

2. Conversion rate 

A good conversion rate is a sign that the efforts are leading in the right direction.  This metric examines if the social media content is bringing results and moving the target audience ahead in the buying funnel.

3. Social media engagement

The daily engagement on social media channels impacts the ROI as they indicate how the audience is interacting with the current content and how is the day-to-day engagement.

For example, If there is an increase in the number of Instagram followers or the post engagement has gone down.

4. Brainstorming and planning

This might not be a tangible factor or a measurable factor but what goes on during the brainstorming and planning stage is extremely important like how is the brand’s messaging personalized to the target audience, how will the follow-up engagement be conducted, and more.

These factors and the action taken on them determine if any campaign will see a positive ROI or a negative one.

ROI is a big picture that every marketer wants to achieve in the right way, but it needs a lot of small steps and proper planning.

And what are the plans and steps?  Let’s discuss

Choosing the right social media platforms

There are countless social media platforms right now in the marketing space, and truth be told, not every social media platform should be on the marketer’s horizon to reach.

Picking a social media platform that delivers ROI-driven results is better than putting efforts into other platforms that can create some vanity metrics.

As per Hubspot’s 2023 Social Media Trends Report, 25% of marketers see Instagram as an effective channel to drive business, followed by Facebook, and YouTube.

Maximizing Social Media ROI by Platform

Source: HubSpot

The buying behavior is changing now. By no surprise, it is shifting online. Now, the users are delighted by an advertisement, and they quickly jump into the purchase cycle.

This makes it imperative to understand the target audience on a particular platform.

Imagine the users as a group of people with similar interests spread out on different platforms. The strategy that might work for Facebook might not work for the audience on Instagram. The nature of the audience and the kind of engagement they are looking for is quite different.

Two key points to keep in mind during this process:

  1. Know the places from where the audience is reaching the site. Use tools like Google Analytics to understand which social media platform is driving traffic.
  2. Align the communication and messaging as per the nature of the particular social media platform.

How to calculate and measure your ROI

The simple and universal formula of calculating ROI: Profit/Investment*100

For example, if XYZ company spends $5 on Facebook ads and earns a profit of $10, then it is a positive ROI.

Every marketer wishes the calculation was as simple as the above social media ROI example. As social media results are not very tangible in the form of monetary gains except for Facebook ads or any other advertisement. Marketers have to heavily depend on non-monetary gains (sign-ups, downloads, traffic, etc).

As these non-monetary factors directly impact the ROI, the calculation will need some extra analysis.

  • If the goal is brand awareness then measuring overall engagement, followers on each platform, and post engagement becomes a metric to analyze
  • If the goal is conversions then measuring paid sign-ups, app downloads, purchases, and forms becomes imperative to analyze
  • If the goal is educating the customer then pdf/ebook downloads, blog CTR, and conversion rate from a particular learning material need to be the focus

Maslow Pyramid Social Media Measurement

Source: Maslow Pyramid For Social Media Measurement

The above pyramid shows the exact KPIs to measure for different social media goals. While conducting this analysis, data analytics software like Google Analytics, UTM parameters, Adwords, and any social media tool will come in handy.

Tips for maximizing social media ROI:

After understanding the factors that impact ROI, picking the right platform, and what KPIs to measure, now let’s discuss some tips that can be applied to any social media marketing ROI strategy.

1. Define the goals

There needs to be a clear plan on what goals need to be achieved through all the efforts that will go in. At times, it can look tempting to jump into a social media trend but the question needs to be asked: will it work in favor of the brand?

Here is the list of questions one can ask while defining the goal:

  • What is the brand’s overall goal?
  • What is the goal that needs to be achieved via Social Media?
  • How will each platform help to achieve the goal?
  • What are the KPIs to measure? (CPC, CTR, CRO, and more)

2. Use the power of social media ads

Social media ads are the most scalable and measurable way of knowing which type of content is bringing in conversions and conversations. The biggest advantage of social media ads is targeting.

It helps to reach a set of audiences that can perfectly benefit from the brand, and Facebook provides an added benefit of a look-alike audience (an audience that has similar interests to a particular set target audience). Making it easier to connect with more people.

3. Using chatbots to drive conversions

Chatbots are an emerging and proven technique to maximize social media advertising ROI.

These chatbots save time and reply to any customer query as soon as possible, making it a delightful experience. They can be easily integrated into the website and even on Facebook messenger.

4. Include user-generated content

UGC (User-Generated Content) is a great way to show brand loyalty and grow authentic communication online with new followers.

It helps to build trust as the experience/review of the current customers speaks louder than any other brand post.

As a part of human psychology, we tend to trust the experience of others before jumping to any conclusion.  And a UGC- type format can do exactly that.

Final thoughts

Improving the social media ROI will be a continuous task, but once the foundation plan is clear, it will be easier to make moderation as needed. Here is a little refresher on everything covered in this blog:

  1. Making a realistic plan and listing down the exact KPIs to measure is essential
  2. Social media ads are a must-have strategy to optimize and streamline the brand communication
  3. Use third-party tools to analyze which social media drives in more traffic and put in efforts accordingly
  4. Use the positive experience of the current customer to generate brand content to build trust online

Social media’s popularity seems to be growing, making it imperative for social media managers to drive deep in analyzing their efforts for a positive ROI.

This blog can act as a guide for anyone starting with their journey to improve social media ROI. Feel free to come back to this blog as and when needed. Good luck!

Author’s Bio: Shweta is a growth marketing specialist who is working with 2xSaS. She creates content that converts website visitors into paying customers for SaaS companies. In her free time, she likes driving around the city & hanging out with her friends.


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