ROI is short for return on investment. Social media ROI refers to the return on investment from social media.
Detailed Explanation
Expressed as a percentage, social media ROI measures the efficacy of social media investments. Put simply, if you earn more than you spend, you have a positive ROI. But if you earn less, you have a negative ROI.
Here’s how you can calculate your social media ROI.
Social media ROI = Returns achieved – Investment / Investment x 100
For instance, if you earn $50 on an investment of $40, your ROI will be:
$50 – $40 / $40 100 = 25%
Additionally, a company’s goals determine how they calculate ROI. The “returns” mentioned above don’t necessarily have to be dollar amounts. They could be percentage values for brand awareness, customer satisfaction, return on sales, etc.
For example, brand awareness could be a company’s most common measure of content efficacy. Revenue, however, could be the third-most common metric. Revenue has a dollar amount attached to it, while engagement doesn’t.
However, the company believes brand awareness will eventually translate into financial gains, so they see it as a valuable ROI. Visit Linktree’s blog to learn more about increasing your company’s ROI or making money as a creator.