Did you know that email marketing has an average ROI of 4200%? That makes it the highest within digital marketing! This means that brands get $42 back for every dollar they spend on email marketing.
The digital world has opened up a new playing field when it comes to marketing ROI. Years back, traditional marketing never made measuring return on investment easy. For example, how do you measure the success of a billboard?
However, marketing ROI isn’t always about measuring the money. It can also be about other things! Keep reading to find out more ways you can calculate, analyze, and improve your marketing ROI!
Why Is Marketing ROI Important?
Business owners and marketing professionals rely on data-driven measurements like marketing ROI when deciding how to allocate their budgets.
A higher ROI indicates a more successful marketing strategy for the people involved in a project, which is why ROI is so important in marketing. Return on investment (ROI) for various campaigns should be monitored on a regular basis by marketing departments. Here’s why:
1. Financial Awareness
You can calculate your return on investment (ROI) to see how much money you are making on each of your endeavors. By tracking the return on investment (ROI) of marketing campaigns, businesses can gain a deeper understanding of their overall sales and revenue figures.
2. Competitor Awareness
Comparing your marketing ROI to that of your competitors is a great way to keep track of your progress in the industry and see how your marketing campaigns stack up against others.
You can improve your marketing strategy if you study the strategies of other companies that have a higher return on marketing investment.
3. Creating Project Priorities
In order to get the most out of your marketing dollars, it is important to track the return on investment (ROI) of each of your campaigns. Reevaluate your advertising tactics or even decide to cut your losses and stop that particular campaign altogether.
ROI in marketing can reveal which campaigns aren’t generating enough revenue.
4. Future Planning
Future projects can be based solely on the success or failure of projects that came before. This can be determined by the ROI that was measured in the previous campaigns. You can use the numbers to decide which parts of previous success stories can be put together to make a cool marketing campaign.
Calculating Traditional ROI
The foundation for calculating your ROI is about knowing the formula you’re going to use to measure your success. You’ve got the following:
- Marketing Return on Investment (ROI) = (Sales growth overall – marketing costs overall) / marketing costs overall
When revenue is compared to marketing costs, the ROI formula gives a good idea of how revenue has changed over time. When comparing the marketing expenditures of two companies, this simple calculation can be a helpful benchmark.
Different Marketing Metrics To Track
There are a number of different metrics to track for you to successfully calculate your ROI. Here’s the list:
- Reach and impressions
- Website visits and qualified leads
- Conversion rates and cost-per-acquisition
These metrics are all the numbers that you need in order to see what marketing tactics are working and what tactics are not.
Digital ads, in particular, rely heavily on measuring “reach.” This metric tells you how many people actually saw the content of your marketing campaign. This can help you calculate marketing ROI.
The number of times your marketing content was viewed can be determined by impressions. This method ignores whether users are unique. You can use it to determine how well your campaign spent money compared to the number of times its assets were viewed.
Measuring Website Visits And Qualified Leads
Visits as a metric for ROI can give your team insight into whether or not the new design is working, whether or not SEO has improved and brought in more traffic, and more.
Lead generation can be costly if your marketing plan isn’t up to snuff. The goal is to keep the Cost Per Lead (CPL) in line with your company’s revenue goals by determining the ROI on lead acquisition.
Measuring Conversion Rates
Conversion rate is a measure of how many people see one of your marketing materials and go on to complete a specific action. Following a CTA on your website, making a purchase, or subscribing to your emails are all examples of conversions.
Managing multiple conversion paths and corresponding conversion rates is not uncommon in marketing. As a result, the return on investment for each conversion will be unique.
Always Set Time Frames
The trick to calculating your digital marketing ROI and making sure that it is meeting your expectations is to do that before you press the green button.
Before any campaign is launched, you should have ROI goals in place as well as a timeline that you would like to reach them within.
This is going to help you calculate the progress of any campaign at any given time, and effectively you can make adjustments during a campaign as opposed to waiting until the end of one.
Content Marketing ROI Is Different
Content marketing ROI works a little differently from general digital marketing ROI. Here’s the formula:
- ((return – investment)/investment) x 100) = content marketing ROI (percentage)
Your investment can be described as anything from the cost of producing and creating content to the cost of hiring someone to do it to the time spent on a content strategy plus the costs of content distribution and software used.
Your ROI could be all things like conversions and leads, better performing SEO, and improved traffic.
Race Forward With Your ROI
Measuring marketing ROI is not a one-size-fits-all approach. You cannot put a cover over the entire process and presume to calculate everything in one go.
Ensure that you have what you need in order to measure all facets of your digital marketing campaigns. If you have these in place, then you should be able to accurately calculate your ROI.
If you’re going to start a new campaign with a marketing agency, ask them about their ROI measurements practices in advance. Ask us now!