If content is fire, social media is gasoline. In other words, you will not be able to find a better way to promote your services than through Facebook, Instagram, Twitter, and other platforms. The truth is, no entrepreneur can survive in today’s digital world without following the latest marketing trends.
But for companies that are still new to this, the ROI of social media marketing might be an unfamiliar term. With that in mind, we dive deeper into all the benefits that social networks bring to the field of advertising.
What Is ROI?
In general, ROI stands for “return on investment”. Investopedia defines it as a way to check the efficiency of an investment and measure its performance. We can also use it to compare how profitable several different investments belonging to one and the same project actually are. So, what ROI does is consider the initial cost of an investment and try to estimate the return on it.
In simple terms, it shows how much money an investment earns us or how much we end up losing because of it. To calculate the ROI of an investment, we need to divide its net profit or loss by its initial cost. The amount we get will usually be expressed as a percentage or a ratio and used to show how well our investment has progressed.
The Pure Genius of Social Media Marketing
Every era has its heroes, and ours seem to be social networks. The truth is, they might even be tragic at times. Still, social media platforms play a huge role in our private and professional lives, regardless of how much (or little) we want to admit it. Let’s face it — most of us rarely let a day go by without logging in to Facebook or checking the latest stories on Instagram.
It doesn’t come as a surprise, then, that social networks are one of the most effective ways of gaining profit. After all, new professions like vloggers, influencers, and TikTokers are being born every day! The funny thing is, even in 2022, some people still can’t wrap their minds around the fact that these have become real vocations.
But right from the start, social media platforms have been bidding on increasing their popularity this way. Since day one, they have depended on advertisements, as well as reading people’s minds and predicting their every move. While this might sound pure evil, it’s still more on the “pure genius” end of the spectrum. The reason is that social networks have found the perfect way to connect brands with their potential clients online.
Care for some social media cookies? Like any other website, these platforms keep track of which content we engage in and which services we might be seeking. They usually get hold of this information through widgets, plugins, and sharing buttons. Finally, they use this data to build a bridge from the attention-seeking brand to all its potential customers.
Why Businesses Can’t Do Without Social Media Marketing
For brands looking to boost their sales online, the world of social media has proved to be a true game-changer. These networks enable companies to easily attract thousands of new customers ready to try out their products. They also allow big brands to engage with their existing clients and create a more steady co-dependent relationship. By running online communities, companies can keep in touch with their customers and work toward reaching a common goal.
According to HubSpot’s recent stats, this advertising channel is nowhere near draining. Quite the contrary, many companies around the world have recently turned to social media ads for help. To understand how big of a role social networks play in advertising, let’s take a look at the actual numbers:
- There are around 4.55 billion people active on social media as of October 2021.
- As much as 79% of marketers decide to buy paid advertising on social networks.
- 82% of marketers share their content across different social media platforms.
- 70% of marketers use Facebook ads to promote their services. In Q3 2021, there were 10 million active advertisers on this platform.
- 90% of people on Instagram follow a business.
- 83% of people on this network use it to discover new services and products.
- 87% of people on Instagram have admitted to purchasing a product at least once after seeing it advertised on this platform.
Related content:
Growing Brand Traffic and Sales: How Social Media Can Help You
What Are the Benefits of Social Media Marketing?
Seeing the above stats, there’s probably a reason why so many marketers decide to target social media. For the most part, they gather large masses all in one place — always ready to make a purchase. But more precisely, social media marketing enables companies to:
- Share stories. Social media platforms like Facebook and Instagram allow us to introduce ourselves to our online audience. Here, we can post about our origin and goals, as well as how far we’ve come. We can also list all the things that set us apart from other similar brands and make us unique.
- Raise brand awareness. These platforms also allow us to become more present in the digital world. As a result, more people might get a chance to come across our company and express interest in our services. The higher our brand awareness ranks, the more trustworthy our company might seem at the end of the day.
- Connect with the audience. If it weren’t for our online follower community, our presence on social media would be completely futile. But our audience isn’t only there to track our moves. More often than not, these people seek our advice and help by reaching out to us on social media. The above platforms can also serve as direct feedback from our clients that we wouldn’t be able to find in the thickest of guestbooks.
Return on Investment of Social Media Marketing
Calculating the success of our brand’s profiles on social networks has never been easy. Still, that doesn’t mean we can’t measure the ROI of our social media marketing. Like above, this is the number that indicates how much value our investments in social media have generated us. Social media ROI is usually expressed as monetary value, but can also be quantified by non-monetary metrics.
Perhaps Ted Rubin, one of the leading social marketing strategists and the co-author of Return on Relationship, has found the best way to describe the ROI of social media:
“When people ask me what’s the ROI of social, I ask them what’s the ROI of trust and what’s the ROI of loyalty. The answer, when used to build relationships, the result will be longer lifetime value of a customer, larger average order value, and increased frequency of purchase. All measurable and all lead to increased sales and profits.”
There are also some other ways in which we can measure the ROI of social media. For example, we can check the following data:
- the number of accounts we have reached
- our audience engagement
- how busy our site traffic gets
- how many leads we have generated
- the number of clients that have signed up or started conversations with us
- the total amount of our revenue
Still, we can come across many challenges trying to calculate our social media ROI. For instance, measuring our revenue generated through social media can present a problem. The reason is that we sometimes might not be able to pinpoint where exactly our income comes from. The only way to know for sure might be to conduct our business directly from our networks.
What to Take Home
Social networks make a fascinating outlet for all the content we’re looking to share with our customers. These platforms are fast, available to large masses, and operate on intelligent algorithms. But calculating the ROI of social media marketing is nowhere near as easy as measuring other revenue. That’s because it depends on fewer material factors like reaches, leads, and audience engagement.
But at the end of the day, one thing’s for sure: our online presence helps us raise brand awareness, share our stories, and keep in touch with our clients.
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A Comprehensive Guide to Social Media Marketing Metrics
If you need even more info about social media marketing or any other related subject, we are here for you. Give us a call at 0800 0148 970 or simply email us today.
