The Social Media Value Equation: Prove Social Matters

By Stevie Sleeter, Content & Social Media Manager

Published: June 20, 2016

For marketers and businesses alike the elusive ROI of social media and proving value in these growing channels feels particularly daunting. There are hundreds, no thousands, of articles out there that try to tie the likes, comments, and shares to dollars and cents.

What most people don’t realize, is calculating social ROI and proving its value is really quite simple when you break it up and look at it from various vantage points.[quote align=”left”]Think of it as a continuous process and evolution of understanding and reporting on your efforts.[/quote] After all, how do you eat an elephant? Bite by bite.

Creating an Equation

Once any fears are dispelled related to the sheer magnitude of social, it’s rather cushy reputation, and executives desire to write it off as useless – you can begin to prove its value.

Social media ROI is what you get back, in dollars or sales, from all the time, effort, and resources you commit to social.

Step one: Choose a goal. Determine what will mark success for your business. Is it likes? Reach? Website visitors? Conversions? Before you can calculate any return, you must know what is deemed valuable.

Step two: Track these events. Choose one or more of the above conversion goals, and start tracking.

Step three: Assign a dollar value to conversions. This is where it may get a little trickier. Here, a candid conversation with the sales team or business development can help. Here are a few ways you can easily look at what a social media action is worth.

– Lifetime value – How much do you earn on average from a customer?

– Lifetime value, multiplied by conversion rate – How much is each potential visit worth to you?

– Average sale – How much is the average purchase through your site?

– PPC costs – How much would you end up paying if you were to use ads to achieve the same social media actions?

Calculating your Investment

The traditional calculation for ROI is ROI = (return – investment) / investment. As such, the only missing variable in our equation is your current investment. Look at the time spent on your social media efforts, the cost of any social media tools, and any current social advertising spend. Once you complete your equation and gather your numbers, play around with displaying your ROI impact in various ways.



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