How to Calculate the ROI of Hiring a Social Media Manager
Irene Allen
How to Calculate the ROI of Hiring a Social Media Manager
What Is ROI in Social Media?
Why You Should Measure Returns
Steps to Calculate ROI
1. Identify Main Goals
2. Decide on Key Metrics
3. Tally Up Total Costs
4. Calculate Value Generated
5. Apply the ROI Formula
6. Review and Optimize
Metrics That Matter Beyond Sales
Presenting Results to Stakeholders
FAQs About Calculating Social Media ROI
How do you handle intangible social benefits that don’t directly lead to sales?
Is it possible to get negative ROI in the early stages?
Can you track ROI with free tools?
What if my ROI fluctuates month to month?
Does ROI differ for freelancers vs. full-time employees?
Final Thoughts on Maximizing Results
How to Calculate the ROI of Hiring a Social Media Manager
When I first started freelancing as a digital marketing strategist, I assumed ROI was just about profit margins and spreadsheet math. Turns out, it’s a little more nuanced—especially when it comes to social media.
Clients often ask me, “How do we actually know this is working?” And honestly, that’s a valid question. Likes and comments are nice, but they don’t pay the bills.
Understanding the return on investment (ROI) for a social media manager helps clarify what’s working, what isn’t, and what’s just noise. Whether you're hiring in-house (or want to hire a social media manager), contracting a freelancer like me, or working with a boutique agency, the numbers tell the story.
What Is ROI in Social Media?
ROI in social media refers to the measurable return generated from your social media efforts compared to the total cost of those efforts.
Unlike traditional marketing ROI, which often tracks direct revenue from one channel, social media ROI can include revenue, lead generation, cost savings, and even intangible metrics like brand sentiment.
Why You Should Measure Returns
Measuring ROI helps clarify whether the money spent on a social media manager actually results in measurable outcomes. This includes direct revenue, lower acquisition costs, or increased lead generation tied to specific channels.
It also creates a baseline for comparison. With clear numbers, teams can make informed decisions about scaling campaigns, reallocating budgets, or adjusting strategies based on actual data—not assumptions.
Without ROI tracking, it's difficult to prove the value of social media efforts. For freelancers, that makes client reporting vague. For businesses, it complicates budget justifications.
"Posting every day for three months without tracking ROI is like running a marathon blindfolded—you might cross the finish line, but you won't know how or why."
Ignoring ROI introduces risk. Budgets might be spent on content or channels that don’t convert. Strategies may drift away from business goals. Marketing performance can appear positive on the surface but fail to move core metrics.
ROI measurement also prevents overreliance on vanity metrics like likes or followers. These metrics are easy to track but don't always translate into revenue or leads.
Tracking returns ensures that every cost—whether it’s $300/month in tools or $2,000 in ad spend—is evaluated against the value it creates. Without this, decision-making is reactive instead of strategic.
Steps to Calculate ROI
Calculating ROI for a social media manager involves a clear process of defining goals, tracking costs, and measuring outcomes. Each step builds on the last to ensure accuracy and consistency.
1. Identify Main Goals
Start by setting specific objectives for your social media efforts. These could include increasing website traffic, generating leads, improving engagement, or driving direct sales.
Goals must reflect broader business priorities—for example, if the business is focused on lead generation, your social media goals should support that focus.
2. Decide on Key Metrics
Once goals are set, choose metrics that indicate progress toward those goals. For lead generation, track form fills, email signups, or demo requests. For sales, track conversions and revenue from social referrals.
Intangible metrics like brand sentiment, reach, and share of voice can also be included. These are harder to quantify but can support long-term value.
3. Tally Up Total Costs
Add up all costs related to social media management. This typically includes labor (freelancer fees, agency retainers, or employee salaries), content creation, software tools, and ad spend.
Freelancers often charge between $500–$2,500/month, while agency retainers can range from $5,000–$10,000/month. Software tools may cost $199–$1,000/month depending on features. Ad spend varies based on campaign size.
Freelancers usually carry lower overheads, while agencies may bundle strategy, creative, and reporting into one fee. These differences affect the total cost calculation.
4. Calculate Value Generated
To calculate value, assign a financial estimate to outcomes generated through social media. This may include direct revenue from tracked links, average lead value, or cost savings from organic reach.
For example, if 100 leads are generated in a month and each lead is worth $200, the total value is $20,000. If social campaigns directly drive $5,000 in sales, add that to the value.
"Not everything that counts can be counted—but that doesn’t mean you can’t estimate it."
Some value may be intangible. If brand visibility improves or customer retention increases, consider using proxies like higher referral rates or longer customer lifetime value.
5. Apply the ROI Formula
Use the standard ROI formula:
[ \text{ROI} = \left( \frac{\text{Value Generated} - \text{Total Costs}}{\text{Total Costs}} \right) \times 100 ]
If total monthly costs are $5,000 and value generated is $15,000, the ROI is:
[ \left( \frac{15,000 - 5,000}{5,000} \right) \times 100 = 200% ]
This means for every $1 spent, $3 was returned—$1 recovered and $2 gained.
6. Review and Optimize
ROI calculations aren’t one-time tasks. Review them regularly to track trends and identify what’s working. Test different content formats, posting times, or platforms to improve performance.
Compare against competitor activity, adjust strategies, and reset goals quarterly or biannually. Social media environments change quickly, so optimization is ongoing.
📊 A spreadsheet is fine, but pairing it with visual dashboards (like Google Looker Studio or automated analytics tools) helps track ROI over time.
Metrics That Matter Beyond Sales
ROI from hiring a social media manager is not limited to direct sales or tracked revenue. Other metrics often influence long-term business performance, even if they don’t convert immediately into dollars.
Brand awareness metrics include reach, impressions, and share of voice. These show how many people are seeing content and how often the brand enters public conversations. For example, a post that reaches 80,000 people with 2,000 shares may not lead to direct sales, but it increases visibility and brand recall.
Engagement metrics—such as comments, likes, shares, and saves—indicate how the audience is interacting with content. Higher engagement often correlates with better algorithm performance, which leads to more organic reach in the future.
Loyalty metrics include repeat engagement from followers, return visitor traffic from social platforms, or brand mentions from existing customers. These can be tracked using social listening tools or analytics platforms that show user behavior over time.
"Not everything that counts is revenue, but everything that counts should have a reason to be tracked."
When tracked consistently, these non-sales metrics can signal future revenue growth. For example, an increase in brand mentions and follower engagement often precedes spikes in direct traffic or conversions—especially during new product launches or seasonal campaigns.
Some businesses use proxy metrics to assign value to these signals. For example, estimating the cost savings of organic reach compared to paid impressions, or the increase in customer lifetime value from loyal returning customers.
These metrics are harder to quantify using the standard ROI formula. Still, they are often included in reports to stakeholders as performance indicators that support larger business objectives.
Presenting Results to Stakeholders
Stakeholders expect clarity, not complexity. Whether data is being shared with a client, internal manager, or investor, the format and delivery of ROI results matter as much as the numbers themselves.
Start by choosing a consistent time frame—monthly, quarterly, or campaign-specific. Use comparative data to show change over time (e.g., March vs. February performance). Avoid cramming too much into one report.
Use visuals to break down data. Bar charts can show cost vs. value. Line graphs can track engagement trends. Pie charts can display channel contributions. Keep labels short and colors consistent.
"If it takes more than 10 seconds to explain a chart, it's probably the wrong chart."
Include key metrics at the top of the report. These might include total spend, total value generated, ROI percentage, and top-performing posts. Add a short sentence next to each number to explain what it means (e.g., “ROI increased 42% MoM due to launch campaign”).
Use plain language. Avoid marketing jargon unless stakeholders are familiar with it. Replace terms like “content buckets” with “post types.” Instead of “organic velocity,” say “increase in unpaid reach.”
If intangible metrics are included (like brand sentiment or awareness), label them clearly and explain how they’re tracked. For example, “Brand sentiment was measured using social listening tools tracking positive vs. negative mentions.”
Group metrics by outcome:
Revenue-Driven: Sales from tracked links, lead value
Engagement-Based: Likes, comments, shares
Awareness Metrics: Impressions, reach, new followers
Cost Summary: Labor, tools, ads
If using spreadsheets, freeze the top row and left column. Use separate tabs for details and summaries. If using a slide deck, limit to one key metric per slide.
When showing ROI formulas, include actual numbers and not just the equation. Example:
ROI = (($25,000 - $7,300) / $7,300) × 100 = 242%
This avoids confusion and shows transparency.
Reports are often shared asynchronously. Add context to slides or dashboards so someone can understand them without a live walkthrough. Use text boxes or speaker notes to explain spikes, drops, or outliers.
When presenting live, keep the walkthrough under 10 minutes. Save raw data for the appendix or backup slides. Focus on what changed, why it happened, and what’s next.
FAQs About Calculating Social Media ROI
How do you handle intangible social benefits that don’t directly lead to sales?
"If it feels soft but shows up in your analytics dashboard, it’s probably worth tracking."
Intangible benefits like brand sentiment or awareness don’t show up in revenue reports but still contribute to long-term performance. These can be tracked using proxy metrics such as engagement rates, share of voice, or customer sentiment scores from social listening tools. Some organizations assign estimated dollar values to these metrics based on historical correlations with revenue growth.
Is it possible to get negative ROI in the early stages?
Yes. In the first few months, ROI can be negative while awareness builds or campaigns are tested. This is common in new account setups, rebrands, or when switching strategies. Value often lags behind initial investment, especially if organic growth is part of the plan.
Can you track ROI with free tools?
Yes. Google Analytics, Meta Business Suite, and built-in platform insights (like LinkedIn or Instagram analytics) offer free performance data. UTM parameters can be added to links to tie social traffic directly to conversions or revenue in Google Analytics. These tools don’t track everything, but they cover enough for basic ROI calculations.
What if my ROI fluctuates month to month?
"March looked bad? Zoom out. It’s probably just the content calendar catching its breath."
Fluctuations are common due to seasonality, campaign cycles, or one-time events. Tracking a 3-month or rolling 6-month average helps smooth out temporary spikes or dips. Comparing periods (e.g., Q1 vs. Q4) gives more meaningful insight than analyzing single-month data in isolation.
Does ROI differ for freelancers vs. full-time employees?
Yes. Freelancers typically charge a flat monthly or hourly rate without added overhead like benefits or training costs. Full-time employees come with salary, benefits, equipment, and onboarding expenses. This makes freelancer costs more flexible and easier to calculate in short-term ROI models.
Final Thoughts on Maximizing Results
ROI calculations are not static. They change from quarter to quarter, depending on campaign cycles, platform shifts, algorithm updates, and even internal changes like pricing or product focus. A report from Q1 won’t hold the same insights as Q3, even with the same team and tools.
Ongoing tracking creates a feedback loop. It connects content performance to business outcomes and allows teams to adjust before budgets are exhausted. For example, if a campaign drives traffic but no conversions, the issue may be with the landing page—not the post.
Freelancers offer more flexibility when recalculating or adjusting strategy. If a business decides to test a new platform or shift focus mid-quarter, freelancers can typically pivot faster than in-house teams or agencies with rigid scopes of work. Fewer approvals, less overhead.
Fixed costs are easier to isolate with freelancers. On Contra, for example, you pay only for the work itself—no percentage commissions, no bundled fees, no long-term contracts unless chosen. This simplifies the ROI formula and improves clarity on cost vs. value.
“Freelancers don’t need onboarding swag, HR software, or all-hands meetings. That’s 0% fluff, 100% output.”
When calculating ROI, cost-efficiency matters as much as revenue. A $25,000 return on a $7,000 investment (242% ROI) isn’t automatically better than a $10,000 return on a $2,000 investment (400% ROI). Freelancers often operate in those tighter, more efficient ranges.
Freelancers also make short-term testing easier. A 4-week campaign with a freelance strategist can run with minimal setup. If it underperforms, the loss is limited. If it succeeds, it’s easier to scale.
April is typically a planning period for Q2 campaigns. For businesses reviewing budgets or adjusting content strategies, this is a common time to revisit ROI models. Freelance social media managers can be brought in quickly to test new approaches without committing to full-time costs.
ROI is not about finding a perfect number. It’s about creating a process that can be repeated, reviewed, and refined over time.
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Posted Apr 2, 2025
Calculate the ROI of hiring a social media manager by tracking costs, leads, and revenue to measure real business impact.
