✅ Define Social Media ROI and its importance in strategic marketing.
✅ Identify the key metrics required for calculating ROI (Reach, Engagement, Leads, Conversions).
✅ Apply the Social Media ROI formula to a practical campaign example.
✅ Explain how to use ROI data to optimize future social media campaigns.
Why Bother with ROI?
Moving beyond "vanity metrics" to prove real business value.
📊 Justify Marketing Spend: Show leadership that social media is a revenue driver, not a cost center.
🎯 Optimize Strategy: Make data-driven decisions on which platforms and campaigns to invest in.
🔗 Connect Social to Business Goals: Directly link social media activity to core objectives like sales and lead generation.
💡 Secure Future Budgets: A positive ROI is the best argument for increased investment.
What is Social Media ROI?
Social Media ROI is a measure of the revenue generated for every dollar spent on social media marketing. It quantifies the value of your social efforts.
In simple terms: For every 1 Rupee you put in, how many Rupees do you get back?
The Path to ROI: Key Metrics
We track metrics along the customer journey, from awareness to action.
Reach 👁️ How many unique users see your content? (Top of the funnel)
Engagement 👍 How many users interact with your content? (Likes, comments, shares)
Leads ✍️ How many users show interest? (Form fills, newsletter sign-ups)
Conversions 💰 How many users take the desired final action? (Purchases, demo requests)
Metrics Deep Dive: Awareness & Interest
Reach
The total number of unique people who see your post.
Impressions vs. Reach
Follower Count
Audience Growth Rate
Engagement
The number of interactions your content receives.
Likes & Reactions
Comments & Replies
Shares & Retweets
Clicks (Link, Profile)
Metrics Deep Dive: Desire & Action
Leads
Potential customers who have shown active interest.
Gated Content Downloads
Newsletter Subscriptions
"Contact Us" Form Fills
Webinar Registrations
Conversions
The ultimate goal; a desired action is completed.
E-commerce Sales
App Downloads
Free Trial Sign-ups
Completed Lead Forms
🔍 Note: Leads and Conversions are the metrics most directly tied to revenue.
The ROI Formula
The fundamental calculation for determining your return.
ROI = (Revenue - Investment) / Investment * 100
Example Calculation
You spend $100 on a Facebook ad campaign. This campaign directly generates $500 in online sales.
Revenue: $500
Investment: $100
ROI = ($500 - $100) / $100 * 100 = 400%
This means for every $1 you spent, you earned $4 in profit.
Deconstructing the Formula
What is "Investment"?
It's more than just ad spend!
Ad Spend (PPC)
Social Media Tools & Software
Content Creation Costs
Agency/Freelancer Fees
Staff Time/Salaries (pro-rated)
What is "Revenue"?
How do you attribute sales to social media?
UTM Tracking Links
Platform-specific Pixels (Meta, TikTok)
Unique Discount Codes
Customer Surveys ("How did you hear about us?")
Lifetime Value (LTV) of a new customer
Practical Application: A Nepali Brand
Scenario: Daraz Nepal's Dashain Campaign
Daraz runs an Instagram campaign with influencers to promote their "Dashain Dhamaka" sale.
Investment:
NPR 50,000 paid to influencers.
NPR 30,000 in Instagram ad spend.
Total Investment = NPR 80,000
Tracking & Revenue:
Each influencer shares a unique discount code (e.g., "INFLUENCER10").
The campaign ads link to the sale page with UTM tracking.
At the end of the campaign, sales from these codes and links total NPR 400,000.
ROI Calculation:
(400,000 - 80,000) / 80,000 * 100 = 400% ROI
Using ROI to Optimize ⚡
Your ROI data is a roadmap for improvement. Here’s how to use it:
Amplify What Works
Identify high-ROI campaigns, platforms, or content formats. Allocate more budget and resources to them.
Cut What Doesn't
If a campaign consistently shows negative or low ROI, pause it. Re-evaluate the strategy or stop it altogether.
Test & Iterate
Use low-performing campaigns as a learning opportunity. Test different ad copy, visuals, and targeting to improve ROI.
Key Takeaways
Social Media ROI moves beyond vanity metrics to prove real business impact and justify budgets.
Calculating ROI requires tracking the full funnel: Reach, Engagement, Leads, and especially Conversions.
The formula is (Revenue - Investment) / Investment. Accurately defining both sides is crucial.
Continuously measure and use ROI data to make informed decisions: amplify, cut, and test your campaigns for better results.
Thank You
Any questions?
Next Topic: Unit 5.1: Content Strategy and Storytelling