If your company’s digital marketing isn’t frequently tracked, measured, and adjusted, it won’t be the “magic” marketing solution. Calculating these efforts’ return on investment, or ROI is one of the most significant ways to assess their efficacy. After all, if expensive marketing initiatives don’t result in sales, what good are they? Well, it is sometimes exhausting to understand the correct type of traffic. But you can always count on brand strategy consulting services. Where the consultants can help you with all the queries
Digital Marketing Metrics
The development of computers and the World Wide Web has opened up new opportunities for marketers to connect with clients online. Digital marketing has emerged as a crucial and significant component of every company’s marketing strategy, with most consumers accessing the internet on their smartphones, tablets, and computers.
In conventional marketing, the increase in revenue and sales produced by a specific marketing initiative, campaign, or strategy was the only metric used to determine ROI. Businesses didn’t bother developing a system to track the development and outcomes of their marketing initiatives. Companies might iterate their marketing initiatives without making any modifications or enhancements if sales increase. In contrast, marketing managers would stop what they were doing and try something else when sales decreased.
The effectiveness of a current campaign can be evaluated by marketers in addition to the campaign’s ROI. However, the return on investment for your digital marketing activities may be determined without complicated software. The fundamental ROI calculation and some key factors to consider when calculating it is provided below.
How Can Digital Marketing ROI Be Calculated?
Return on investment is merely a comparison between the revenue generated by a digital marketing campaign and the expense of designing and implementing the campaign. The ideal ROI is one that is as high as possible.
ROI is often calculated as (Net Profit/Total Cost)*100.
However, if you don’t have any objectives or goals, use faulty data and statistics in your calculations, measure the wrong key performance indicators (KPIs), or are unsure of what you’re monitoring, the return on investment estimate won’t mean much.
Prior to determining a campaign’s ROI, take into account the following:
1. Be aware of your objectives
You want to demonstrate to management how well your digital marketing methods generate income for the company. Before you implement and evaluate your campaigns and strategies, it’s critical to understand your specific marketing objectives.
Your digital marketing effort won’t always produce outcomes that demonstrate ROI. Lead generation and clicks, for example, can be counted but don’t have a monetary value that would show ROI. You won’t be able to determine whether your marketing activities are truly effective if you only consider money.
2. Determine Important Performance Indicators
Your KPIs must consider that your business is distinct from your direct competitors in your industry and geographical area. You will obtain data that is useless for your firm if you attempt to use the KPIs of other organizations.
3. The data collection method should be clean
Your data-collecting system and methods must collect data cleanly to measure your KPIs. When evaluating the success of your digital marketing campaigns for locating, attracting, and converting online customers, inaccurate KPIs will be of no help.
Make careful to specify the KPIs you want to track, evaluate, and gather data on before you begin data collection. These KPIs must be consistent with your entire marketing strategy, objectives, and goals. Finding and implementing data-gathering software that works with your company’s marketing budget and has the features necessary for your company to measure its KPIs also helps. This is vital if your marketing and sales teams are active in the marketing initiatives. Create a consolidated, accessible data-collecting system and procedures for your sales and marketing departments.
4. Acquire an understanding of how these KPIs integrate into the big picture.
The primary purpose of marketing is to increase sales, typically stated as revenue and return on investment. When ROI is your primary concern, you only see a small portion of the digital marketing landscape. Even though many of your KPIs do not direct link to a more significant ROI, there is often a correlation between them, and they both play important roles.
For example, if your KPIs include an increase in click-through rate and a decrease in cost-per-customer, your marketing ROI may grow during the same period. This highlights how an increase in website visitors who discover your page using a free organic search engine can increase sales and decrease acquisition costs, increasing your return on investment. Your KPI measures may not be helpful on their own, but if you comprehend how they interact to boost your ROI, they become highly powerful.
5. Use KPI insight to measure ROI
How do the volume of website visitors, cost per lead, ranks in search engine results, and shares of your Facebook or Instagram posts translate into a return on investment for digital marketing? These KPIs are effective measures of how successfully (or unsuccessfully) your digital marketing campaigns bring in clients and produce conversions.
Your brand awareness and authority will undoubtedly increase if your social media outreach results in interactions with leads or you publish content that becomes viral, which will probably result in more money and sales. Optimizing your website’s content can boost website traffic and session length, which will probably result in a higher return on investment.
Sales and subscriptions will undoubtedly rise due to improved trust and authority through increased online interaction and visibility obtained through KPIs. These will boost your company’s revenue and improve the return on investment for your digital marketing initiatives.
What Does a Good ROI for Digital Marketing Look Like?
It can be helpful to look at the industry benchmarks for particular KPIs pertinent for your organization, depending on what ROI you are evaluating. The average conversion rate for Google Adwords advertisements is about 2.4 percent, while the top 25th percentile and top tenth percentile have conversion rates of 5.3 percent and 11.4 percent, respectively.
It’s also crucial to remember that email marketing, direct traffic, and search traffic all have the potential to increase your order value. Typically, social media produces the lowest order value. Tools like MailChimp create statistics that list suitable ROI standards for email marketing conversion rates based on company size, industry, unsubscribe, open, and click-through rates.