Is Investing in Social Media Marketing Worthwhile? What Should Be ROI?

Is Investing in Social Media Marketing Worthwhile? What Should Be ROI?

The primary question that marketers usually face is whether investing in social media marketing worthwhile. Here’s a blog that tries to answer that question.

The history of social media dates back to the time when people used to write letters to stay in touch with each other.

With the onset of 20th century and technological advancements, the interactions on social media have changed rapidly.

1. Why Invest In Social Media Marketing?

Social media and marketing have a strong connection with both the customer and the investor. There can be many reasons as to why one should invest in social media marketing.

With the use of social media marketing, one can generate awareness about their brand more specifically. Marketers have innumerable tools and options at their disposal to promote their goods and services.

One of the main features which attract investors to use social media as a marketing tool is the faster, improvised, and systematic form of communication that they offer. Also a diversified and large pool of audience waiting for good content online is one of the major draws of social media marketing.

In the world of finance, where time is money, social media networks like Twitter, Facebook, and Instagram are one of the best ways to reach out to the audience, as well as gather market knowledge on their mindset.

Social media networks are easy to use and share information about a business and the services it provides. Investors also get the option to filter and choose their desired target audience, to whom his business content will reach. This not only saves time but also ensures that the business is popularized among its target audience.

According to a study from the University of Michigan, a firm having its own online branding community is more effective for the business vis-à-vis a presence on social networking sites like Facebook and Twitter. Customers spend 19 percent more post joining the company’s own social networking platform.

Another study conducted by the International Journal of Research Marketing reveals that engaging a user through the use of social media enhances the brand loyalty. This fuels a stronger relationship between the consumer and the brand.

“The findings indicated that social media use was positively related with brand relationship quality,” notes the study.

Moreover, a Nielsen research points out that roughly 39 percent social media users believe that the importance of the network lies in discovering and learning about new services and products.

This suggests that a company would do well to invest in social media marketing, as they have potential customers who are waiting to learn about a new offering.

2. What Is Social Media ROI?

The Return on Investment or ROI is the amount a company will be getting in return of the invested amount of time, money, and resources it has put into social media marketing.  In short it is the result or the fruit of the investment one has made.

Social media, if used correctly, can help investors attain their ROI goal. However, if used in the wrong manner, it can make the business suffer a huge loss. So, there are various ways by which an investor can use the social media to generate revenue for the business.

Social media ROI is important as one it tells the investor where they wish to go and which direction they should actually be headed. This is imperative for a company’s marketing campaign to be successful. Else, one is simply wasting time, effort and money in a fruitless exercise.

Simply put, social media ROI is the results of a company’s efforts to promote the brand on social networking sites. What the output is – which ideally is measured in terms of money.

Basically, if one subtracts the investment (including, time, people and budget) made from the money one generates through social media campaigns, one gets the social media ROI.

3. Why Is Social Media ROI Measurement Important?

Keeping a track of the social media ROI is really important as both the client and the supervisor have the right to know how well a particular product, service or the overall business is performing.

The ROI gives a clear picture of the business’ performance on social media – whether it is successful or a failure. It not only gives a clear view of how well a particular business is performing, but also the areas it needs improvement in.

Succinctly put, the ROI is the measure of a business’ success. It paints an almost accurate picture of the firm’s performance and is a transparent measuring tool. Moreover, any management will want validation if a particular campaign is successful. This needs to be substantiated with data, which can be effectively provided by an ROI measurement tool.

According to a Jive Social Business Index Survey in 2011, nearly 27 percent execs that have a social media budget are of the belief that it is a priority for the company. Unfortunately, 47 percent of those surveyed were of the belief that while a social plan was important, it was not a priority.

ROI basically depends on the goal of the company. So, before tracking the ROI it is important for the investor to have a clear cut goal for his or her business.

4. How to Measure Or Calculate Social Media ROI

There are many ways one can keep a track or measure their social media ROI. ROI can be measured through various options such as, clicks, lead generation, revenue, contest entries and many more.

Firstly, one needs to set a fixed social media goal, including the factors that must be considered while tracking the ROI for the company’s investment. These factors can be clicks, contest entries, customer acquisition and many other aspects.

Secondly, an investor needs to determine or choose the correct platform for the promotion of his/her business. Some companies use Twitter as their medium, whereas few others opt for Facebook, Pinterest or Instagram.

Before tracking the ROI, one needs to make sure of the following:

  • Where are your roots?
  • Where you will get the most fan following from?
  • How much time are people spending on that particular platform?

In short, you have to choose your platform based on the demands of your customer, as well as the type of target audience you have chosen.

The third most important factor is to keep track of your ad campaign. This may include the time and cost spent on marketing an ad. It may also take into account various other activities, which were launched as a part of the social media marketing campaign.

Lastly, one can keep a track of their ROI by reviewing the results. This is really simple. Once you have the reports or the statistical data showing the results of your investment, you can have a clear idea of how well your marketing strategy was working. You can also keep a track of where you went wrong and plan for the next venture appropriately.

5. Tools to Measure ROI

In order to be more specific regarding the measurement of ROI, one can get hold of these free ROI measuring tools to make the job simpler and less complicated.


One of the easiest tools to measure ROI is HootSuite. This tool allows one to schedule uploading of posts from various social media platforms and also create separate reports on them.


Similar to Google Alerts, this tool will help investors get an overview of how their investment is working and how well their ROI is placed. One can also set an RSS feed, alerts, as well download CSV or Excel file for a more detailed evaluation.

Facebook Insights

As the name suggests, Facebook Insights’ dashboard allows one to get an in-depth knowledge of all the analytical data of your business page, such as understanding the audience and their response, and where the idea needs a punch to boost up.

Facebook Insights also guides one to adjust their marketing strategy according to the evolving needs of the consumer.

Twitter Analytics

Twitter Analytics, used by most businesses nowadays, helps you to track the timeline effectively, as well as checking how much a tweet was liked, replied to and shared. This tool also keeps a track on new followers that the business gains over time.

6. Best Practices For Reporting ROI

The best practice for tracking ROI is to keep a record of its progress.  Also, maintaining a proper balanced progress chart helps an investor to have a clear understanding of the returns.

The alignment of social media efforts with tried and tested marketing activities is one of the best practices for reporting ROI. The two in tandem can support each other, but it is pivotal to coordinate both communication channels. The alignment can transpire via a communication plan, which is coordinated and balanced.

The mapping of one’s social media efforts with the goals of the business is also a good practice to follow. It is important to have a clear understanding of the ROI’s importance for the company and one’s efforts. There should be clear metrics and goal establishment, followed by the marketing tactics and ploys which will aid the company achieve these not-so-lofty goals.

The golden key of reporting ROI is for a company to become handy and utilitarian. This way, the consumer will invariably turn to seek the company’s assistance first.  The company should continue to ask itself what solutions it can offer to an unusual or banal problem. The company needs to evolve itself constantly to stay abreast with consumer requirements.

Sawaram Suthar (Sam) is a Founding Director at Middleware. He has extensive experience in marketing, team building and operations. He is often seen working on various GTM practices and implementing the best ones to generate more demand. He has also founded a digital marketing blog - TheNextScoop.

5 Tips To Increase Diversity And Avoid Stagnation Of Your Digital Marketing

When diversity becomes a problem, many marketers start running...

6 mins read

The Psychology in Digital Marketing 2022

With more and more companies going online, digital marketing...

5 mins read

5 Tips You Need to Know In Order To Successfully Manage Your Online Brand

Managing a company, and that company’s brand can be...

4 mins read