What is social media ROI and why it is important

Do you have any idea how much money is spending on digital marketing in Bangladesh each year? Before reading an article on the Daily Star, back in February of this year, I did not have an idea about this. According to the report, Bangladesh ad market companies in Bangladesh are spending taka 1000 crore in digital marketing every year. In Bangladesh digital marketing primarily means advertising on Facebook. Social media marketing or Facebook marketing in this country is still a nascent industry. At present, we have 3 crores Facebook accounts across Bangladesh. It will increase in the coming years. So companies are getting more interested in social media marketing than traditional marketing. In this backdrop, marketers, businessmen need to know what is social media ROI and why it is important measuring it.

What is social media ROI?

ROI means return on investment. In simple terms, it means profit gained from an investment. If you want to calculate social media ROI in terms of revenue earn then the formula is social media ROI (in terms of percentage)= profit/total investment x100. Here total investment covers money, working hours, not a single identity. If you invest taka 5,000 for example, in Facebook advertisement and earn revenue taka 10,000 then according to the previous formula your social media ROI would be 10,000-5,000/100 or 100%.

But calculating social media gain is not that simple. Because there is no shortage of metrics to calculate profit gain from social media. You can measure ROI in terms of fans, followers, retweets, and shares. Another way of calculating success is the number of referral traffic a website receives from social media platforms. It is also possible to calculate the number of purchases in a website generated from the Facebook ad.

As is I stated earlier calculating ROI in social media is a complex thing. Here is another approach to prepare social media advertisement report for top management of the company. In this approach, digital marketers calculate the amount of money spent on an advertisement. This includes employees salary, training cost. Then they measure user reaction to this advertisement. Using different analytics available in the market, they can determine several user actions triggered by the advertisement, for example, the number of page views, downloads, email sign up and purchase. Then they calculate the outcome by finding what was their target in terms of page views, number of email sign up and purchase and what they achieve after the ad campaign.

social media ROI

Why measuring social media  ROI is important?

Although complex but calculating social media ROI is important because by doing that you would know whether you are getting the desired outcome or not. Unfortunately, many people have no idea how to calculate social media ROI. Many of them follow other footsteps. In other words, they use social media for products promotion because others are doing the same thing.  Consequently, they cannot reap any benefit out of it. Here are a few points in favor of measuring social media ROI:

  • Perception of company’s top management about social media marketing will change from the positive result of the social media campaign.
  • Marketers get a clear idea of customers behavior towards products, services from social media ROI report. They can change advertisement content, techniques in accordance with the customers’ attitude.
  • You can identify why any social media channel, for example, Facebook, Twitter, Youtube that cannot reach target customers. So you have chance to fix the issue.




Leave a Reply

Your email address will not be published. Required fields are marked *