How to Equate ROI on Social Media

How to EQUATE ROI on Social Media  

Social Media advertising has great ROI, return for investment, and it is smart business practice to see specifically how and where it is working for you. To understand the equation, you must first perform the groundwork, so I will share with you from top-to-bottom this process.  Once done, this will become an automated system for you.

To find your ROI, Return on Investment, you must first know where you are going.  This forward thinking is a crucial step and cannot be missed. Building sales and equating ROI is like building a shed and deciding if the shed is producing value and can be used in other ways. To build the shed you must ask yourself why (the goal), and then you need your measurements and the tools and the data to equate the feasibility.

Strategy and forecast must be on your mind from the beginning steps. 

1.  Goal. Increase of interest (commonly sales) in your organization with a metric.   The metric are clicks, calls, emails or subscriptions. If sales is your interest, determine a realistic percentage point of how you want your marketing and sales to increase.  For example; = 6% in 12 months.  It is not okay to say “I want sales to increase” because that is not measurable.  Choose a length of 6-12 months because it takes time to get traction.  A social media following may not happen overnight, and you may need to attract attention by strategic placement and/or paid ads.  Create a starting point vision, then you can adjust as you move forward.
2.  Measurement. A measurement is analytics.  When you have your measurement basis, this creates your data to see what is working well and what is not, and from here, you can adjust accordingly to your goal. The free avenues to measurement are through your YouTube Channel, Facebook, and Google Analytics. (https://analytics.google.com). There are other web-based platforms that offer analytics.  From these platforms you can gather those valuable monthly metrics. The more you work with analytics, the more you can determine what is the valuable information for your requirements.
3. More Traction. AdWords campaigns (https://ads.google.com) is one avenue for an easy and economical means to obtain higher traction for your videos or social media. Capturing those valuable conversions that are on a broader scale.  The analytics in AdWords allows you to narrow in on the what and where and who for your campaign.  The keywords to use, and other resources so you are not spending your hard-earned dollars in areas that are of little use to you.
4. Data. Cost of campaigns and analytic figures.  With the analytical data in hand, you not only have the means to adjust to your goals and what you spend and where, but you have the data figures needed to easily equate your ROI over time. 

I have also made it simple for you in an interactive sheet that you can download free from our website at www.bfpvideos.com.

                                                                           RAW EQUATION EXPLAINED 

                                                   Revenue from Social Media – Cost of Social Media Activity
                                                                           Cost of Social Media Activity 

                    
ANALYTICS AND SALES DATA COLLECTED/MONTH
10 VIDEOS                   = 1000 CLICKS
1000 CLICKS                = 500 LEADS
500 LEADS                   = 100 PURCHASES
 
TRAFFIC TO LEAD CONVERSION RATIO – Useful statistical information to have
500                               = LEADS
1000 = 50%                = CLICKS
 
LEAD TO SALES CONVERSION RATIO - Useful statistical information to have
100                               = PURCHASES
500 = 20%                  = LEADS
 
                                                                 ROI EQUATION IN PRACTICE
 
BASE STATS:
NUMBER OF PURCHASES = 100
REVENUE PER PURCHASE = $100 (each of your product is $100 in this instance)
COST OF SOCIAL MEDIA  = $500 (is what you spent in this campaign, not including cost of video in this instance because video is a one-time cost)
 
REVENUE
# of Purchases x Cost of Purchase = Revenue from Social Media
100 X $100 = 10,000
 
ROI EQUATION
Revenue from Social Media – Cost of Social Media
                          Cost of Social Media
$10,000 – $500
        $500
 
= 19% OR 19.1    = EVERY $1.00 SPENT HAS GENERATED $19.00 IN SALES
Your ROI equation
 
 
To get a free download of an interactive spreadsheet to plug in your own figures, visit our main page on the website.



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Professional Video is the #1 communicator today because it delivers efficiently and on an emotional level, addressing the needs of your target audience so they will engage with you further.

Your message -> delivered how your target wants to receive it = conversion for your business.

BFPVideos are experts on Video Marketing and Video Production.

I hope this has helped.
If you have any questions or would like a free consult, I would be happy to assist.

All the best to you and your business

Angela Tahara
Creative Director
604-916-7646
www.bfpvideos.com

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