Does everything you do have an immediate ROI?
Probably not.
But that doesn’t mean that you shouldn’t be measuring everything to know what digital marketing actions are producing an ROI, and which ones are not?
Digital marketing is all about growing your brand and creating ROI for your business. But how do you know if your efforts are paying off? And how can you improve your ROI in the future?
In this article, we will discuss the importance of measuring ROI for your digital marketing campaigns, and we will provide tips on how to do so effectively. We will also discuss some of the most important KPIs, or key performance indicators, to track to measure success.
Let’s dive in!
ROI: what it is and why it’s important?
ROI, or return on investment, is a key metric for evaluating the performance of any digital marketing campaign.
Simply put, it measures the amount of revenue generated from a given campaign.
For example, if a company spends $100,000 on a digital marketing campaign and generates $1 million in sales as a result, then the ROI for that campaign would be 10x or 1,000%.
This example shows a great general ROI, but we can go one step further and measure the ROI generated by specific sections of the campaign.
For example:
- PPC – $20,000 spent & $40,000 earned = 2x or 200% ROI;
- Influencer Marketing – $50,000 spent & $500,000 earned = 10x or 1,000% ROI;
- Content Marketing – $20,000 spent & $300,000 earned = 15x or 1,500% ROI;
- Public Relations – $10,000 spent & $160,000 earned = 6x or 600% ROI.
As you can see, armed with the breakdown of this data by tracking ROI is important because it allows companies to see which campaigns are generating the most sales and adjust their spending accordingly. It also provides valuable insights into which marketing strategies are most effective at driving conversions.
Ultimately, tracking ROI is essential for any business that wants to maximize its return on investment in digital marketing.
How to measure ROI for digital marketing campaigns
How do you measure ROI for a campaign that involves so many different investments such as ads, creative and influencers, and even more customer touchpoints like search, social, email, earned media, marketplaces, and your website?
The answer lies in understanding which KPIs (key performance indicators) to track.
For example, if your goal is to increase brand awareness, you might track metrics like reach, engagement, and frequency.
If your goal is to generate leads, you might track click-through rates and conversion rates.
If your goal is sales you might track conversion rates, average order value, and returning customers.
Some common goals in digital marketing are:
- Increase brand awareness;
- Generate leads;
- Boost website traffic;
- Improve conversion rates;
- Increase sales or revenue.
By understanding which KPIs are most relevant to your goals, you can more accurately measure ROI for your digital marketing campaigns. And that’s how you measure ROI for digital marketing campaigns!
The KPIs to track to measure success
Once you’ve identified your goal, it should be relatively easy to come up with a few KPIs that will help you track progress.
For example, if your goal is to increase website traffic, then an obvious KPI would be the number of visitors.
The most important thing when starting a digital marketing campaign that generates ROI is to make sure you’re tracking the right data.
Here are some of the most important data points you should track:
- Search rank or domain authority: this is a good metric to track if your goal is to increase brand awareness or organic traffic to your website.
- The number of leads: this metric will help you determine whether or not your campaign is generating new leads.
- Cost per lead: this is a great metric to track if you’re looking to generate ROI from your digital marketing efforts.
- Website or page traffic: this KPI will help you track the number of visitors to your website or landing page.
- Social media engagement: likes, comments, shares, and views are all important metrics to track if your goal is to increase brand awareness or reach on social media.
- Reach: in content and social media marketing, reach is an important metric to determine the number of people who see your content.
- Conversion rate: this is an important metric to track if your goal is ROI (which I’m guessing is important if you are reading this blog post 😉 ).
- Customer lifetime value (LTV): lifetime value is a great metric to track if you’re looking to generate long-term ROI from your digital marketing efforts.
These are only some of the common KPIs, but there are many more that might be right for your brand.
Once you’ve identified the KPIs you want to track, the next step is to focus on the right channels and set up a system to track them, and at on them.
My top tips for improving digital marketing ROI
ROI, or return on investment, is a key metric for any business – but it can be especially important in the world of digital marketing. After all, with so many different channels and strategies to choose from, it can be difficult to know where to invest your time and money.
But by understanding ROI and using it to measure your performance, you can ensure that your digital marketing efforts are always delivering the best results.
Here are my top tips for improving ROI in digital marketing:
- Set clear goals and KPIs. Without a clear idea of what you want to achieve, it will be difficult to measure ROI accurately. So before you start any digital marketing campaign, sit down and identify your goals. What do you want to achieve? How will you know if you’ve succeeded? Once you have a good understanding of your goals, you can start setting KPIs (key performance indicators) that will help you track progress and measure ROI.
If you’re not sure where to start, in the section above I listed some common digital marketing goals.
- Focus on quality over quantity: It’s easy to fall into the trap of thinking that more is always better. But when it comes to digital marketing, this isn’t necessarily the case. In fact, trying to do too much can be counterproductive.
Spreading yourself too thin will not only make it harder to achieve your goals, but it will also make it more difficult to measure ROI. So instead of trying to tackle everything at once, focus on doing a few things well.
Although you might start with quantity so that you have enough pieces of content to measure, quality should always take precedence over quantity.
Think about the channels that are most likely to help you achieve your goals and invest your time and resources accordingly.
For example, if you’re looking to generate leads from LinkedIn, spend some time creating quality content and building up your presence on the platform. There’s no point in trying to be active on every social media platform if you’re only going to get results from one or two of them.
Remember, it’s better to do a few things well than to try and do everything poorly.
- Experiment with different marketing channels to find what works best:
There’s no one-size-fits-all solution when it comes to marketing ROI. The best way to find out what works best for your business is to experiment with different channels and strategies. Try a few different tactics and track the results so you can compare and contrast which ones are giving you the best ROI.
Usually, the sticking point for many brands when facing growth opportunities is the question “With the budget we have, what types of actions should we take and where should we take them?“
Analyzation-paralyzation kicks in and efforts get postponed over and over again.
Meanwhile, the competition moves fast, grows their brand, and leapfrogs the paralyzed brand.
This happened to Blockbuster when Netflix beat them at their own game.
This happened to Polaroid when it refused to invest in the growing digital camera market.
This happened to Toys R’ Us when they went all-in on Amazon and didn’t build their own eCommerce platform for toys when they had the brand power.
Facebook beat MySpace, Apple beat Nokia, Amazon beat Barnes & Noble, and so on.
While failing to use decades of data to effectively project the ROI of new initiatives killed (or seriously maimed) the businesses above, the same can happen in digital marketing.
MVMT stole market share from brands like Rolex, Citizen, and Tag Heuer because they saw the data showing Millenial’s engagement in eCommerce and social media, and acted on it with influencer marketing on Instagram.
Dollar Shave Club saw the untapped potential of YouTube and eCommerce when trying to launch against competitors like Gillette and Schick.
Oreo reacted to the stadium lights going out during Super Bowl 47 quicker than any other brand with a clever tweet that got billions of impressions over the past decade.
Some channels you might want to experiment with and what to test include:
- Search engine marketing (SEM): Experimenting with titles, descriptions, and certain site links will help you find common drivers of clicks.
- Social media advertising: Similar to SEM, testing the components of the ad such as images, video clips, headlines, descriptions, and calls-to-action will help you find common drivers of clicks or views.
- Content marketing: Try different types of content like blog posts, infographics, ebooks, webinars, and more to see which ones generate the most leads or customers.
- Public relations: Try different tactics like media outreach, influencer relations, product placement, and more to see what generates the most earned media coverage.
- Referral marketing: Experiment with different ways to get people to refer your business such as referral discounts, referral contests, or simply making it easy for them to share your content or products.
- User-generated content (UGC): This can be something as simple as asking your customers or fans to post about various topics to see which ones they like the most, and which ones bring your brand the most followers, likes or sales.
- Email marketing: Try different subject lines, intro paragraphs, images, and CTAs inside your emails to see which ones convert the best.
Once you’ve experimented with a few different channels, you should have a good idea of which ones are giving you the best ROI. From there, you can focus your efforts on those channels and double down on what’s working.
How to analyze data to determine action items to improve digital marketing ROI
When it comes to digital marketing, data is king. But what good is all of that data if you don’t know how to properly analyze it? To get the most out of your digital marketing data, here are a few tips to keep in mind.
- Analyze how your website traffic changes after implementing different marketing campaigns;
One of the most important things to track when running a website is how traffic fluctuates after implementing different marketing campaigns. This data can provide valuable insights into what works and what doesn’t, as well as which audiences are most responsive to your site.
To get started, simply install a web analytics tool on your site and start tracking traffic patterns. After a few weeks, you should start to see patterns emerge. If you notice that certain campaigns result in a significant spike in traffic, be sure to investigate further.
By understanding how your website traffic responds to different marketing campaigns, you can fine-tune your strategy and ensure that you’re getting the most out of your marketing efforts.
- Compare the ROI of different digital marketing channels
Deciding how to allocate your marketing budget can be a tough decision. But fortunately, there’s a way to figure out which digital marketing channels will give you the biggest return on your investment: compare the ROI of different channels. Here’s a quick rundown of how the ROI of various digital marketing channels stack up:
- Email marketing: 4,300% ROI (on average);
- Paid search: 2,700% ROI (on average);
- Social media: 1,800% ROI (on average);
- Display advertising: 1,200% ROI (on average).
As you can see, email marketing provides the best ROI, followed by paid search and social media.
But lower short-term ROI doesn’t necessarily mean the platform isn’t as valuable.
For example, email marketing might drive a higher ROI than social media, but social media can build multi-million-dollar brands with millions of impressions almost all by itself (i.e. Dollar Shave Club, MVMT, Glossier).
So when looking at the net result, the long-tail value of social media might be more important than the short-term ROI of email.
But of course, everything works better together.
- Determine which online ads are driving the most sales or leads
Online advertising can be a tricky business.
Anyone who’s ever clicked on an online ad knows that they can be pretty annoying. You’re just trying to read an article or watch a video, and suddenly you’re bombarded with flashing images and loud noises. It’s no wonder that many people have developed ad blindness, a condition where the brain automatically filters out ads.
There are so many different platforms and ad formats to choose from, and it can be hard to know which one is right for your business and more importantly, your potential customers who are seeing it.
Fortunately, there are a few ways to measure the effectiveness of your online advertising. One way is to use Google Analytics.
Google Analytics can track how many people click on your ad and how many of those people go on to make a purchase.
Another way to measure the effectiveness of your online advertising is to use UTM parameters. UTM parameters are special codes that you can add to your URL to track where your traffic is coming from. You can then use this data to see which platforms are driving the most traffic to your site.
By understanding which online ads are driving the most sales or leads, you can adjust your ad spend accordingly and ensure that you’re getting the most out of your marketing budget.
- Evaluate the success of your social media campaigns
Regarding ads vs. content, I always suggest to my clients that we start with content marketing and social media content.
Nir Eyal, entrepreneur, investor, and author of Hooked: How to Build Habit-Forming Products, explained in a lecture I watched on Section4.com that businesses can buy growth with ads, but they cannot buy engagement, that has to be built into the product [and content].
This is why social media can be such a powerful tool for your business.
Social media, unlike most other platforms, can engage and influence millions of people around the world with just a single post.
But planning the perfect viral “home-run” is impossible.
This is why testing and measuring everything is the key to successful brand-building on social media.
Organic social media campaigns are those that rely primarily on owned, earned, or user-generated content (UGC) to promote a brand or product. This can include things like brand-generated content, influencer-generated content, user-generated reviews, photos, videos, and more.
One way to measure the success of your organic social media campaign is to look at the engagement levels of your content, and earned content from your community. Are people commenting on your posts? Sharing them with their friends? Liking or following your brand? The more engagement your UGC gets, the more successful your campaign is likely to be.
- See what content is being shared the most and try to replicate that
Content is king, and this is especially true when it comes to social media.
Successful brands on social media are those that produce high-quality content that their audience wants to see. But the most successful brands on social are the ones that produce content that people want to share.
Sharing is how a piece of content goes viral.
Using software like SproutSocial or Hootsuite can help you measure your content’s shares across many platforms.
Continuously improve your strategies based on results achieved
There’s an old saying that goes, “If it ain’t broke, don’t fix it.” But in the ever-changing world of digital marketing, that simply isn’t good enough.
Just because something isn’t broken doesn’t mean there isn’t a better way to do it.
And just because something is working today doesn’t mean it will still be working tomorrow.
That’s why it’s so important to continuously test and measure your marketing strategies and Tactics and be prepared to change things that aren’t working and pivot to new approaches when necessary. after all, the only thing that is constant in the world of digital marketing is change itself.
So if you want to stay ahead of the curve and maximize your ROI, you need to be constantly changing.
Want help executing meaningful change? Let’s change together.
