How are you measuring the ROI of social media? Do you measure up against your peers? Does the ROI of social media meet your expectations? Do your metrics help make better business decisions?

ROI of social media

ROI means return on investment and when we talk about the ROI of social media we’re looking at metrics to evaluate your increased sales as a function of expenses to drive those sales. But, that’s really hard to do since there really isn’t a direct link between social media and sales. In the infographic below, see some of the surrogates for return firms use to evaluate their social media marketing campaigns.

The ROI of Social Media. How Do You Measure Up?

Firms use everything from vanity metrics like # of fans/ followers to hard returns, such as increased revenue and conversions. Others build metrics around processes leading to sales — such as positive word of mouth (mentions), message virility, and site traffic.

Surprisingly, a number of firms don’t track any metric and I bet if you really got down to it, you’d find it’s mostly bigger firms that accurately measure the ROI of social media. How does your firm doing when it comes to measuring your ROI? Are you happy with your ability to assess how well your social media is doing in generating ROI?

Likely, your answer is NO!

Coming from a background in direct marketing, here are some suggestions for doing a better job of tracking the ROI of social media.

Tracking the ROI of social media

1. Set objectives. Do you want your social media marketing to generate more traffic to your website? More leads? More sales? Or are you simply interested in creating more awareness and positive sentiment associated with your brand? Your objectives determine what you should measure and define what you’re talking about when you look at the ROI of social media.

2. Embed coding to track results. It’s not only important to know the ROI of social media, but to know what’s working and what isn’t. Use embedded codes to allow tracking of online ads, calls to action, placements, etc. so you know which efforts generate the best ROI.

3. Build predictive models. Most of the metrics assessed by CMOs, according to the infographic, are descriptive metrics meaning they tell you how much, when, how often, etc. What you REALLY need to assess the ROI of social media, are predictive models that tell you WHY folks take certain actions online.

Certainly, you can look at your most popular posts from your website, Facebook, or Twitter, or images from Pinterest and Instagram and group them according to type. That would tell you that certain types of posts do best on each social platform. That might tell you that images of your shoes on a model do better than images of the shoes alone, for instance.

Truly predictive models go beyond such simplistic observations. Predictive models include data mining, observations, and survey techniques designed to determine factors that correlate with ROI in social media. An example of a predictive model is one built by Fishbein and Ajzen (depicted below) which describes buying behavior as a function of consumer attitudes and societal norms. This model is particularly appropriate for social media because these 2 factors are pretty obvious on social platforms.

The ROI of Social Media. How Do You Measure Up?


  • BI = behavioral intention
  • (AB) = one’s attitude toward performing the behavior
  • W = empirically derived weights
  • SN = one’s subjective norm related to performing the behavior

Building predictive models to estimate ROI of social media

Step 1 – Determine which algorithm to use — ie. our pals Fishbein.

Step 2 – Collect empirical data to determine the weights (which vary greatly with context).

Step 3 – Analyze, commonly with software that fits a line to the data — called linear regression.

Step 4 – Interpret the analysis to determine which course of action yields the highest ROI.

Need help determining the ROI of social media for your firm?

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