## Calculating the ROI of Your Social Media

Simply throwing money at the problem never all works. All that ends up happening is that you’ll go way over budget and you still won’t have the results you actually want. As with all other forms of business, it is just as important for you to keep close tabs on the performance of your social media marketing. At the end of the day, it really is about the numbers and that’s why the most successful Internet marketers are the ones who are particularly adept at working with metrics and analytics.

They’re the ones who are able to wade through that sea of numbers, unearth potentially lucrative trends, and cash in before anyone else and better than everyone else. This is the same reason why it’s so important to split test your landing pages and keep a close eye on your traffic sources so you know where best to direct your efforts. I need not remind you of the Pareto principle, right?

## Simple ROI Calculation

When it comes to calculating return on investment for simpler, more traditional endeavors, the math is relatively straightforward:

(Benefit – cost) Ã· cost = return on investment

ROI is typically expressed as a percentage. So, if we forget about income taxes and fees and other considerations for the sake of simplicity, the ROI when you buy something for \$100 and sell it for \$110 for a \$10 profit is 10%, because (110 – 100) Ã· 100 = 0.10 or 10%. That’s simple enough to understand if you think about buying stocks (again, ignoring fees and such), flipping merchandise on eBay, or whatever else.

## Applying to Social Media Marketing

This calculation might be reasonably easy to understand if your marketing efforts lead directly to sales (and you can connect those dots reliably), but how much is a “like” on your post really worth? What’s your rate of return if you gained 100 new followers to your Facebook page? This can feel much less concrete and much more ethereal than investments that only involve dollars and cents, but you can arrive at a reasonable approximation if you’re willing to accept a few assumptions.

After you decide on the goal of your social media marketing — like getting new email newsletter subscribers — and you track how you did on that goal after a campaign, you must then ascribe a monetary value to that metric. More specifically, you’ll typically look at the lifetime value. How much is this new follower worth over the long term?

But for the sake of simplicity, let’s use these hypothetical figures for a one-time benefit:

• Let’s say you spent \$1,000 on this campaign.
• You gained 500 new email list subscribers