It goes without saying that Facebook has somewhat of a monopoly on the whole social media marketing game; Facebook even bought Instagram. If you are a business planning to use Facebook to attract fans and customers, then you must play by their algorithm rules, which include paying for ad spend. Paying for ads brings in engagements and shares and click throughs, but what does it do to the bottom line? What is the actual value of a Facebook like, or reaction?
The best way to answer this question is by figuring out the Return on Investment, ROI, of a positive Facebook reaction. (Or negative, too. You know what they say: no such thing as bad press.) Both your superiors and your teams will be thankful for this information as ROIs help explain where you’ve been and point to where you’re headed.
To help this process along, we’ve laid out seven steps to calculate the ROI of the Facebook “Like” so you can know for sure if what you are doing is making a difference to your bottom line:
Step 1: Set Your Conversion Goals
Every campaign will have different conversion goals, but setting one will be your first step in successfully determining your social media ROI. Your Conversion Goals will be a clear call to action for your customer to proceed on these prompts, for example:
- Fill out a form
- Sign up for email list
- Make an online purchase
- View a video
- Engage in social media post
- Go to a specific webpage
- Download a white paper or study
In Ads Manager, Facebook also allows you to choose a response (conversion) for your specific campaign. To do this, you’ll want log into your Ads Manager account and click the green box in the middle of your screen that says “Create+”.
You will then be asked to choose your objective. These range anywhere from Brand Awareness to App Installs to Website Visits. If you are interested in merely establishing the ROI for a Facebook engagement, then you’ll want to choose “Engagement.”
From there you can choose “Post Engagement”, “Page Likes” or “Event Responses.” For the purposes of determining your ROI, the simplest and easiest would be “Post Engagement” or “Page Likes.” “Event Responses” is more of a complicated equation as it forces the question of what type of response you want for your event: comments, likes, shares, attendees, etc. This two part equation goes beyond the purposes of this post.
For all intents and purposes, the Conversion Goal we are interested in for this post is the Facebook Like.
You must have a conversion goal or a clear call to action for your users, to have a starting point for your ROI calculation.
Step 2: Track Conversions
You’ll want to track many metrics in order to get a good number for conversions on your social media posts. A number of different platforms and tools will make it possible for you to track these conversions: Google Analytics, Sprout Social, and Facebook Insights…to name a few. No matter what you use to track or what you metrics you choose, these 5 considerations are of utmost importance to your ROI calculation:
- Reach: The total number of people that your post “reached” or have the potential to be seen by your social media audience. (See here how Reach is different than Impressions.)
- Traffic: The number of actual users visiting your site or the destination based on your conversion goal.
- Leads: The number of leads coming from each referring social media site onto your conversion page.
- Customers: The number of people who become customers through social media.
- Conversion Rates: The percentage of visitors through social media platforms that are converting into customers. This number helps you define what is and isn’t working in your social media strategy.
Step 3: Assign Monetary Value to Each Conversion
Although this step may seem daunting at first, stay with us. There are two different routes you may take in order to assign your monetary value:
- Method 1: Using Historical Data
Based on previous experience, if you have done Facebook or social posts before with a tracked conversion, the prior number will give you some idea of what you can expect. If you haven’t had previous experience in this department, then you’ll want to go with Method 2.
- Method 2: Guesstimating
Guesstimating boils down to common sense and common knowledge. Decide what you’d pay per sign up if your goal was to get 1,000 Likes. Use whatever number you land on as the number for for the monetary value.
Step 4: Measure Benefits for Each Channel
The key to this step in the process is organize, organize, organize! Use your social analytic tools to collect important data regarding the conversions for Facebook. These are the benefits of the Facebook Like. Keep track of the total number of conversions that you had per Facebook post and then multiply it by the monetary value from Step 3. For example:
1,000 Facebook likes x $15 = $15,000 in benefits from Facebook
Step 5: Determine Total Costs
In order to determine your total costs, you’ll need to add up everything that went into your social media strategy to gain the Facebook likes in question:
- Fees: How much do your tools cost, or any other fees that you incur for your strategizing, executing and analyzing?
- Labor Hours: How many hours were spent on the specific campaign to acquire your desired conversions?
- Labor Cost: Broken down, what is the cost per hour for said labor?
Added together, these numbers will give you the total cost per channel.
Step 6: Calculate, Analyze and Improve
Now that you have all the numbers, you can finally calculate your ROI. Use your calculations from Step 4 and Step 5 to plug into the following equation:
ROI = (Benefits – Cost x 100) / Cost
Your calculation here will be positive or negative and will give you a good idea of what is working and what isn’t and what you need to improve. But concerning the value in question, the Facebook Like, this number will let you know if the Likes you are getting on Facebook are worth the time and energy you are spending on the platform. If your ROI is negative, then you have two critical options:
- Change up your campaign, or
- Change your social platform.
While Facebook is considered the holy grail for social media marketing, if your customers aren’t on it, then it’s time to question whether it should be where you are putting your efforts…at least for now. Consider building your social media presence on a different platform and plan to make the move and expand on Facebook later.
Step 7: Get Feedback From the Experts
It is always a wise choice to run your numbers and strategy by a trusted source. Digital Agencies like ours are the experts in this field because our sole purpose is to analyze your data and strategy and give your feedback based on our desired outcome and your actual ROI. this process is based on trust, support, feedback and implementation of new ideas. While you may be calculating your ROI and following Facebook’s lead, the experts in this field always know the ins and out of small changes to your strategy that can make a big impact.
In addition, it would be good to remember that the equation explained above is not just useful for determining the value of the Facebook Like. You can use the same equation to calculate your ROI on virtually any digital strategy. We hope you find this helpful and would love to know first hand how you implement it into your social media marketing efforts!