Stop Guessing! 6 Powerful Ways to Calculate ROI Through Digital Marketing

How to calculate ROI through digital marketing?

 

Digital marketing, just like any other marketing effort, requires marketers and business owners to calculate ROI or Return on Investment. This is important because you want to know if the money you are investing into digital marketing campaigns is doing any good or not. To calculate the ROI through digital marketing, you will first need to get the basics right. In other words, you will need to know what exactly you are looking for to calculate the ROI. And that’s exactly where KPIs or Key Performance Indicators come into the picture.

 

Which KPIs to consider for different digital marketing campaigns?

 

The KPIs depends entirely on the kind of digital marketing campaign you are running. Here is a breakdown of different performance indicators and metrics you need to track to calculate the ROI for your digital marketing campaign.

 

1.  eCommerce

 

If you are running an online marketing campaign for eCommerce, you will need to have key performance indicators like website traffic, social media engagement, subscribers, cart items, reviews, and more. The ROI metrics will be sales revenue, average sales price, transactions, revenue, conversion rates, and average order price.

 

2.  Lead Generation

 

In lead generation campaigns, you must track KPIs like website traffic, form conversions, webinar attendance, confirmed demos, and form completions. These will help you track ROI metrics like lead volume, cost per lead, lead quality/conversion rate/close rate.

 

3.  Content Marketing

 

For content marketing campaigns, you might consider KPIs like website traffic, CTRs, average session time, pages per session, and social media engagement to tracking ROI metrics like online newsletters subscription/downloads, content shares, content reads.

 

4.  Email Marketing

 

You need to pay attention to metrics like bounce rate, open rate, unsubscribe rate, clicks and CTRs, conversion rates, leads, and more to find the ROI for your email marketing campaign.

 

5.  Social Media Marketing

 

You are looking for engagement and engagement ratio, clicks and click-through-rates, and content shares. The most crucial part of social media marketing is creating relevant content. So, you better get that right before you start collecting data to measure ROI.

 

6.  Website Landing Pages

 

For digital marketing campaigns dependent on website landing pages, you will have to track metrics like traffic, unique and returning visitors, total page views, time spent on the landing page, and conversions.

 

7.  Mobile Video Advertising

 

When you are evaluating the ROI for mobile video advertising campaigns, consider metrics like brand awareness, purchase influence, accessibility, and mindshare. These can be sought when you track your branded hashtags, mentions, the number of clicks, social media shares, traffic generated for your website, ad placement, likes, and comments.

 

8.  Native Advertising

 

Native advertising is used when you want your content to seamlessly fit into the organic content of a site or mobile application. To track the ROI for native advertising campaigns, you should track the total number of click-throughs, number of people that submit contact information, number of comments and queries, number of content shares on social media, and more.

 

9.  Programmatic Advertising

 

These specifically-targeted advertising campaigns require you to track the number of mentions (positive and negative), website traffic, and CTRs. Most importantly, you will need to know how exactly people are coming to your site. Are they typing in the URL or click on your ad?

 

So, choose the performance metrics according to the kind of marketing campaign you will run for your brand. Once you do that, go through the basics of calculating ROI through digital marketing. 

 

6 Basic principles to calculating ROI through digital marketing

 

1.  Set your objectives correctly

 

The objectives for the digital marketing campaigns are set to move through the entire testing and measurement process efficiently. Every marketing campaign should have set goals and objectives that you want it to achieve, which will eventually deem the campaign successful. So, figure out what exactly you want out of your digital marketing campaign and strategies before you go on to execute them. 

 

The most common digital marketing objectives are:

 

·Sales/leads generation

·Brand building

·Improving SEO

·Boost qualified traffic

·Manage online reputation

·Conversion

 

However, the results that the campaigns show might not always be proportional to the ROI. You will have to take the help of KPIs and then calculate the effectiveness of your marketing strategies.

 

2.  Identify KPIs that meet your goals

 

KPIs or Key Performance Indicators are the campaign metrics you might want to track. The KPIs are different for different business objectives and campaigns. So, we hope you found out the business objectives before getting onto this basic step. Now, finding the right KPIs are important too. You don’t want to track metrics that aren’t useful to your campaign. Otherwise, you will end up with data that will provide insignificant or no information at all. We have a whole section on KPIs that will allow you to calculate ROI through digital marketing. So do check that. For now, you can consider these common KPIs:

 

·Unique Monthly Visitors

·Cost Per Lead (CPL)

·Cost Per Acquisition (CPA)

·Return on Ad Spend (ROAS)

·Average Order Value (AOV)

·Customer Lifetime Value (LTV)

·Lead to Close Ratio (LTCR)

·Branded Search Lift

·Average Search Position

 

Once you have the right set of KPIs to monitor, you can calculate ROI through digital marketing using this simple formula:

 

Projected ROI = [(LTV-COGS-CAC)/(COGS+CAC)]*100

 

Here,

CAC = LTCR*CPL

COGS = Cost of Goods Sold

 

3.  Systemize data collection methods

 

But, you can only trust the metrics if you put the right data collection methods to use. The data collection systems you will use for your marketing campaigns need to be free of any inaccuracies, inconsistencies, and redundancies to ensure the data collected is clean and the KPIs measured are not skew. Most importantly, you will need to align your sales and marketing departments to set up a uniform data collection system and procedures. This will significantly improve your capacity to calculate accurate ROI through the set KPIs.

 

4.  Collect insights from KPIs

 

Once you have the right data sets to work on, start using them to draw insights about the website traffic, cost-per-lead, search rankings, and more. The data collected through different KPIs should be matched with the set marketing objectives and goals to figure out whether or not the campaigns are working the way they should.

 

5.  Test for different dimensions

 

The next step in calculating the ROI should be testing. It’s true that you can put the data collected to use and calculate the ROI, but that is just not what we recommend. Some of the elements that you can test for your digital marketing campaigns are:

 

·Targeting audience (demographics)

·Headlines and copywriting

·Call-to-Actions

·Images, audio, video

·Subject lines

·Content

·Product descriptions

·Landing pages

 

We want you to have the best possible ROI for your digital marketing campaigns. And that will only surface when you test the campaign for different elements, targeting, frequency, and messaging. Run A/B tests and get the best combinations for your ad campaigns before you calculate the final ROI.

 

6.  Seize opportunities for improvement

 

The testing phase will reveal the areas in the campaign that you can improve. This is the part of the process that will help you boost the ROI. Once you are done with testing, you will have enough data to notice patterns and trends that are limiting the performance of your campaigns. Make amendments and run the campaigns again to achieve the set marketing objectives, now in a more efficient way.

 

Optimize Your Campaigns for Better ROI!

 

There you have it. Once you apply the above-mentioned basics to calculate ROI through digital marketing, you will not be far away from achieving your set business objectives and goals. Make sure you go through the KPIs again to ensure your data collection systems are tracking the right metrics. Need help to boost your digital marketing ROI? We have just the right team and tools for you. So, feel free to connect with us! But, before you do that, go through some of our other informative blog posts too. They might solve your ROI measurement issues for free. Happy marketing!

 

References:

 

·https://www.crazyegg.com/blog/ab-testing/

·https://www.dragon360.com/blog/common-online-marketing-campaign-goal-objective-examples/

·https://digitalbrandinginstitute.com/digital-marketing-objectives-for-your-business/

·https://www.yokellocal.com/blog/how-to-calculate-roi-in-digital-marketing

·https://www.lyfemarketing.com/blog/digital-marketing-roi/

·       https://blog.marketo.com/2017/12/measure-digital-marketing-metrics-roi.html

·https://www.business.com/articles/how-to-measure-digital-marketing-roi/

 

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