Measure and Improve your ROI
An article on how to track and improv your ROI through Digital Marketing.
Calculating the ROI of digital marketing has become the most prominent activity. The measurement of ROI is essential as it is the only way to know for sure if you’re allocating your budget effectively and getting the most out of your marketing spend. Fundamentally, marketing ROI is a process of continuously improving marketing performance and profitability by applying deeper insights to maximize the effectiveness of strategic and tactical decisions.
Let us first know about what ROI refers to?
Digital marketing ROI is the measure of the profit or loss that you generate on your digital marketing campaigns, based on the amount of money you have invested. Measuring your online marketing ROI helps you determine the effectiveness of your strategies.
The purpose of measuring ROI is to know whether your budget for marketing is being spent wisely. By measuring ROI you can also conclude if your marketing strategies are working or not.
How to Measure ROI?
Most companies use the ROI formula to measure their digital investment. The basic formula for measuring ROI is:
ROI = (Net Profit / Total Investment) * 100
However, in order to measure ROI there are many parameters in digital marketing, that give you a detailed insight of the expenditure by various mediums. Moving forward we are going to look over such parameters;
• Conversion Rate
It is one of the most popular metrics used to track ROI. Conversion rate provides you with the data that states the percentage or number of customers acquired out of the potential customers that were exposed to the digital marketing campaign.
For example, your campaign has good traffic but your conversion ratio is less compared to the traffic generated, then you need to improve your efforts on the landing page/website.
• Cost Per Lead
As the name states, it is used to measure the per cost of lead. Measuring cost per lead proves beneficial as it provides a direct insight in how effective is your campaign for capturing new leads. In order to calculate cost per lead, the formula is:
CPL = (Total Ad Spend / Total Attributed Leads)
• Return on Ad Spend (ROAS)
In the simplest terms ROAS is a marketing metric that measures the amount of revenue your business earns for each dollar spent on advertising.
ROAS = (Campaign Revenue / Cost of Campaign)
In order to calculate these parameters, you need the campaign metrics that you can obtain by using Google Analytics, Bing Analytics, etc. These platforms give you the data necessary to calculate and understand how effective your campaign has been.
Key Principles for Improving your ROI
• Establish Specific Goals
Having specific goals based on data in numeric terms, not only helps to measure the campaign but also provides an outlook if the campaign is being effective. Establishing specific goals not only refers to having monetary plans but it also includes achievable goals within a time frame and is relevant to your future business objectives.
• Data Informed Decisions
Experience goes a long way in making business decisions, but they are not always right. When making decisions having data about the campaign helps in making decisions that would benefit the campaign. Such informed decisions become the base of a successful campaign.
• Test & Adjust
Running a single campaign hoping to get the maximum number of leads is a pipe dream, as no marketer can run a campaign that is extremely successful without any previous data. In order to get the best settings for your campaign you would have to run test campaigns and adjust accordingly to run a successful campaign multiple times.
• Seize Vital Opportunities
Once you have metrics over a course of time, you can begin to notice the trends of the market able to identify the opportunities. Hence, in order to improve your ROI you can also utilize your data and knowledge to run campaigns for opportunities you are able to capture.
In conclusion, you can see there are various benefits of measuring ROI in digital marketing. You may not get everything right with these metrics but you may be able to make better decisions and get the best of your campaigns. If you are in need of digital marketing services and require help to manage your digital activities Odopod Marketing Services is here to help you.