One of the really great things about digital marketing is that we can get a deep understanding of ROI. Measuring digital marketing ROI is absolutely essential to ensure you’re getting your money’s worth. Without knowing the performance, it’s impossible to determine whether your tactics are generating the right results.
Knowing how effective your tactics are means you can adjust them when things aren’t working.
What is ROI in digital marketing?
ROI in digital marketing is the measure of the profit and loss made on your digital marketing campaigns. Using your investment as the basis, ROI in digital marketing shows you whether it’s working or not. A positive return means the campaigns are bringing in more money than your initial outlay – a win.
The success of a campaign depends on what the ultimate goal is. There is a range of end goals, from conversion to brand awareness. This is where you need to start, by defining what your goals for your tactics are. Then work backward to understand if your tactics are working.
There’s a lot of data you can garner from various analytic platforms, so break down the journey. There are platform metrics that show how people are engaging with your content. Then there are the larger metrics that show how your activity is working.
Let’s start with the platform metrics.
ROI in digital marketing platforms
Provide your audience with the content they need to engage with your brand and make decisions about working with you. Check out how your platforms are performing:
Visitors to the blog, blog content engaged with, unique and returning visitors, time on page, and conversions (such as going to the contact us page).
Engagement rates, clicks, followers, leads, and conversions.
Open rate, click-throughs, leads and conversions, and bounce rate.
The metrics above show how your content is performing per platform. Next, feed these results into the wider performance goals you should have. These include:
This is a good way to measure the impact of your digital marketing. There are lots of ways someone can convert, for example, a conversion could be visitors who go to the contact us page.
Other conversions can be channels where your traffic comes from. One channel will normally provide you with more conversions than other channels, though this doesn’t necessarily mean it gets more traffic. It means the visitors that come from this channel are more engaged and more likely to buy or connect with you onsite.
You decide what the best conversions should be for your end goal.
Cost per lead
A popular metric, it’s good to know just how much per lead your campaign investment costs.
Simply divide your total spend by the number of leads and you’ll see how much each lead costs you. Lots of platforms will help you see how much a lead has cost you at different stages, for example, social media advertising. It’s possible to get very granular with targeting so you can ensure your content gets in front of the right people.
Cost per acquisition
The step-up from cost per lead is the cost per acquisition. This is how much you invested to get a new customer. Knowing how much you spend per new customer allows you to see where and how to invest in digital marketing to get the best return.
Importantly, you can balance out how much a customer invests with you versus how much you spend to attain them. Are you getting the customers you deserve? Don’t be afraid to change your tactics if they aren’t working for you.
Customer lifetime value
It’s possible to measure the value of a customer over the lifetime of your relationship with them. It’s a core part of digital marketing ROI as it shows how much a customer will spend with you.
For example, it might cost you £500 to bring in a customer. They might spend £500 with you in the first month, so this might not seem great ROI. But if they spend £500 a month for the next year, then that’s a fantastic ROI.
Look at the long-term value of a client and balance that out with your initial investment. It’ll provide an accurate view of your ROI in digital marketing.
Analysing your digital marketing results
It’s tempting to go into your analytics every day to check your performance. Don’t do this, it won’t give you the overall picture. Even month-by-month only shows part of the picture. There are things that will affect your performance such as seasons, pandemics, and Google updates. Instead, view quarterly, six-monthly, and yearly to get the best understanding of how your tactics are working.
The best results will be gained from defining your goals from the start. What do you want to achieve? Use the SMART framework (specific, measurable, achievable, relevant, and time-bound) to create goals that will work for you and your company.
Put KPIs in place to ensure you are on track to meet your goals. Adjust if they aren’t working.
Keep testing across all your platforms and tactics. There’s always room for improvement in your digital marketing and continually testing and adapting means you will get better performance.
Change the image or the headline. Turn a blog post into a video. There are a myriad of ways to reuse the content you have already and make it work even harder for your online presence.
Get the most out of your digital marketing
Digital marketing is an ever-changing channel and results can show you where and how you’re succeeding. It can also show you where you need to focus. There’s a lot to learn from digital marketing about how your audiences interact and engage with you. You can continually shape and adapt your marketing to get the results you deserve.