by MICHAEL DEL GIGANTE, founder, MDG Advertising

Most marketers know that incorporating digital channels, including social media, is essential to engaging today’s tech-savvy consumers. However, many are unsure of how to determine social media success. The CMO Survey recently reported that fewer than 25% of senior marketing professionals say they could clearly quantify the effectiveness of their companies’ social media strategies.

With so many types of social media engagements to analyze, many marketers feel that measuring social media return on investment (ROI) is a daunting task. Fortunately, it’s possible to determine whether your social media efforts are actually effective.


To determine social ROI, start with your goals, rather than metrics. Why are you using social media to promote your brand? Answer this important question by defining wide-ranging goals, such as improving lead generation, boosting sales, and expanding brand awareness.

After determining these objectives, take the next step by connecting your goals to measurable key performance indicators (KPIs). Goals that can be connected to actions include website click-throughs, increased views of a specific content piece, online orders, and new newsletter sign-ups.

Simply put, determining a small number of specific, quantifiable actions will help you clearly measure the success of your social media efforts.


The second step is often the hardest: assigning values to each measurable action. This may not happen overnight, as it involves creativity and insights into customer behavior. However, you can start this process by examining the relationship between revenue and online action, such as the lifetime value of a website visitor, the cost of services you promote on social media, and a customer’s typical order size.

Once you’ve taken a closer look at your website and social analytics, you can link each trackable action to an estimated value. These estimations can include the value of a newsletter subscriber, contact form submission, and social media-driven website users.

During this step, you may realize that the metrics you’re currently tracking, including comments and likes, may not result in revenue. Instead, you might need to analyze other metrics, including website visits, the click-through rate, and sign-ups.


Establishing a good foundation with measurable goals and the value of every tactic is important, but there’s another essential component of calculating social ROI: How much do your efforts cost?

To figure this out, start with your content. Look carefully at the cost of creating each post, as well as any other promotional and distribution expenses. These factors will only give you a small view of the big picture; however, marketers should also look at technology and labor costs.

Operating expenses also factor into the total social media costs, including the employees working on social media, all software devoted to social, outside support, and expenditures related to conferences and training.

Take a look at every aspect of your marketing budget — as well as any other allocations — to make sure that every related cost is taken into account.


After determining your goals, collecting data, and analyzing budgets, it’s time to do the math. Calculating your social ROI is easier than you might expect: Simply determine your brand’s total revenue from social (multiply actions and value for those actions) and your total investment (factoring in all costs). Then, it’s time for some calculations:

(Total Social Revenue – Total Social Costs) x 100 / Total Social Costs = Social ROI (percentage)

Ultimately, calculating the ROI of social media is more than just math; it allows you to see whether your social efforts are truly working. It also allows you to delve deeper into each individual effort, helping you fine-tune your overall strategy. This is why knowing your social ROI is so important: You’ll be able to determine which approaches are working and which ones aren’t delivering results.

This article originally appeared in the September/October 2019 issue of the Toy Book.