What is ROI in social media marketing?

ROI, or Return on Investment, is a key performance metric that calculates the profit or value gained from an investment compared to what you spent. . In the context of social media marketing, ROI measures the profitability of your social media efforts by comparing the money gained from your activities against what you've spent.

The ROI Formula

The basic formula to calculate ROI is:

ROI = (Return − Investment) / Investment × 100

For example, if you spent $500 on a campaign and earned $2,000 in revenue, your ROI would be:

($2,000 − $500) / $500 × 100 = 300% ROI

That means you earned 3x your investment.

To effective calculate social media ROI, factor in all costs, including ad spend, content creation, staff time, and tool subscriptions.

Let’s say a small e-commerce brand runs a paid Facebook campaign to promote a new product:

• Ad Spend: $300
• Design Tools & Freelance Help: $100
• Total Investment: $400
• Result: $1,200 in product sales from that campaign

ROI = ($1,200 - $400) / $400 × 100 = 200%

This means the brand earned double their investment, making the campaign successful in terms of financial return.

ROI in Social Media Marketing

On social platforms, ROI can be monetary (sales, leads, subscriptions) or non-monetary (brand exposure, community growth, customer satisfaction). For example:

Measuring ROI helps justify your social media spending by demonstrating tangible business impact. It guides budget allocation by showing which platforms and campaigns deliver the best returns. Without tracking ROI, it's impossible to know if your social media efforts are actually contributing to business goals or just generating vanity metrics.