# 7 Easy Steps to Calculating the ROI of Your Social Media

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There are a number of highly complex—and, sometimes, downright convoluted—methods for calculating the Return on Investment (ROI) of your social media efforts. But let’s face it—most small business owners don’t have an advanced degree in mathematics, statistics, or finance! Thankfully, there is a simple and commonsense way to determine your social media return that is both (a) accurate and effective and (b) requires only rudimentary skills in math.

The whole heart of ROI is to determine how much value you got back from an investment—in this case, an investment represented by your social media efforts. To do this, you simply want to identify what you got in return and how much (in total) it is worth (i.e., its value). You then divide your value by your cost to arrive at your return on social media investment. You can compute this important financial ratio over any period of time—a day, a week, a month, a quarter, a year, etc..

The following infographic from Ignite Social Media provides a simple method for calculating your ROI in seven easy steps. This example is based on a common small business that (a) manages a blog and (b) utilizes Facebook, Twitter, and YouTube as social media platforms. However, you can easily modify these steps to reflect the social media platforms you are utilizing.

## ROI: Quantifying Social Media Value

To determine the value provided during many of the steps, you simply use the average cost of PPC clicks. Furthermore, you can utilize any value for posts (e.g., tweets), shares (e.g., retweets and mentions), and views (e.g., a YouTube video). In this example, Ignite Social Media uses a cost per thousand (CPM) of \$10 and a cost per view (CPV) of \$0.20—however, you can adjust these values to fit your experience and unique marketing environment.

## ROI: Quantifying Social Media Cost

To determine the cost of your social media activities, simply add all your related expenses. For example, you will want to include your website hosting costs, any costs associated with social media analytics and management products (e.g., HootSuite), and any payroll costs for employees engaged in your online marketing activities. Furthermore, you may need to determine the percentage of each item that is directly related to the activities you are analyzing. For example, if you have a marketing employee that spends 10% of his or her time on content management (e.g., blogging and content curation), 10% on social media engagement (e.g., posting, conversing, and listening), and 5% on social media administrative functions (e.g., analytics, research, planning, and strategy)… then you would only want to factor in 25% of his or her compensation to your social media costs.

## Conclusion

By calculating your social media ROI, you can easily determine if your efforts are paying off—or if changes need to be made!

infographic by IgniteSocialMedia.com

photo by: jseliger2
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#### Doug Bennett

Doug is a proud follower of Christ, dad of 4 awesome kids, and the founder of High-Octane Small Business Consulting, which provides results-oriented solutions to boost small business performance. He has over 15 years of proven management, marketing, leadership, communications, and accounting experience--spanning the private, nonprofit and public sectors.