How To Measure Your Digital Marketing ROI?

Whether you own a small local business or a Fortune 500 listed company, Digital Marketing is the name of the game right now when it comes to growing a business exponentially. A large number of businesses have begun investing in digital marketing activities over the last decade or so.

Amid all the enthusiasm, there’s a big question mark on the productivity of these digital marketing campaigns pertaining to the lack of knowledge about how to gauge the effectiveness of digital campaigns.

This blog will throw light on how to measure your digital marketing ROI and figure out whether the time, money and efforts you are putting into your brand’s digital marketing are actually contributing to your company’s bottom line.

So let’s begin…

Digital Marketing ROI

First, let’s understand what Digital Marketing ROI actually is.

In simple terms, Digital Marketing ROI is the measure of profit/loss generated on digital marketing campaigns based on the amount of money invested; i.e., whether it has been yielding any positive results.

Calculating digital marketing ROI helps you to identify & analyze the low-performing areas of your campaigns and take actionable steps towards improving them. Further, it helps in comprehending the areas where you should be allocating the majority of your marketing budget for the best possible results.

How to Measure Your Digital Marketing ROI

Whether it be brand awareness, lead generation or conversion, each digital marketing campaign has its own unique goal.

So measuring digital marketing ROI isn’t just about comparing the financial output of your campaigns to the total cost incurred. It depends on your unique goals. Hence, we’ve assembled a list of common digital marketing metrics that will help you measure the ROI of your digital marketing campaigns:

Conversion Rate

For campaigns aimed towards conversion, this is the metric that will help you realize whether you are succeeding in your goal or not. Conversion rate primarily deals with the quality of leads generated and is a direct factor of how one defines the buyer persona to hit the right audience.

Here are a few things that you should have an eye on when it comes to conversion rate:

Conversion rates by channel

Knowing the channels which are providing most of the conversions are very important. It will help you tweak your resource allocation to get maximum conversions from the best-performing channels.

Conversion rates by device

Similarly, conversion rates by device will help you deduce the effectiveness of your campaigns on different devices and take actions accordingly.

Cost Per Lead

For lead generation campaigns, cost per lead is the go-to metric for determining your ROI. Cost per lead is as simple as dividing total ad or campaign spend by the total number of leads generated through it.

Lead Close Rate

Lead Close Rate enables you to know the actual effectiveness of your digital marketing campaigns. Checking the profitability of each of your marketing campaigns can be done by analyzing the lead close rate against the leads that are being generated.

This metric will also help you set a benchmark for new campaigns and make you aware of the need for changes if the new campaigns aren’t generating leads at the expected/average rate.

Cost Per Acquisition

This metric gives you the average cost of acquiring a new customer. CPA is total marketing costs divided by the total number of generated sales. If the CPA is higher than the financial value customers actually bring to your company, then your ROI is on the wrong side of the graph. Quite simply, it indicates the need to make changes.

Customer Lifetime Value

A pivotal metric in terms of understanding digital marketing ROI, CLV tells you the amount spent by an average consumer over their lifetime as a customer.

It’s common knowledge that ROI is not just about initial customer acquisition costs, it’s also about what you stand to gain from a customer over the long term. CLV provides you with an improved understanding of a customer’s overall value and a fresh perspective on initial acquisition costs and ROI.

ROI Using Digital Marketing Tactics

The above-mentioned metrics can be used for measuring the ROI of your digital marketing campaigns. Nevertheless, it’s vital to understand that the metrics to be used for measuring your campaigns will eventually hinge on the tactics used in them.

The metrics for measuring social media marketing ROI won’t necessarily be the same as that for calculating email marketing ROI. Along with that, the goals and objectives will also define the metrics that you use for measuring ROI on contrasting marketing channels.

Keeping that in consideration, here’s a list of metrics that can be used for measuring digital marketing ROI depending on the tactics used:

• Email: Open rate, click-through rate, bounce rate, unsubscribe rate, conversions, and leads acquired
• Social Media: Engagement rates, clicks and click-through rate, conversions, leads acquired, and new fans or followers
• Landing Pages: Traffic, unique visitors, returning visitors, total page views, time spent on page, actions taken, and conversions
• Blogs: Traffic, clicks, time spent on page, unique visitors, returning visitors, actions taken, and conversions

Opt For Year-Over-Year Comparisons

One thing to always keep in mind is that you should never compare ROI data month-to-month.

Month-wise comparisons can provide you with a distorted view of things as they won’t account for specific irregularities or seasonal demands. Year-Over-Year comparisons will provide you with a clear idea of the improvement/decline in your digital marketing campaigns over time.

Conclusion

Being able to measure your digital marketing ROI is integral to improving the performance of your campaigns and extracting the best possible results out of your digital marketing endeavours. This measurement helps link campaign success to the overall bottom line of your business.

Important things to note:

• Start with specific & measurable goals before you begin to measure digital marketing ROI.
• Ongoing measurement and subsequent tweaks are key to success in digital marketing.

If you aren’t comfortable with data or are having a hard time getting the expected ROI on your digital marketing campaigns, then do get in touch with us.

We are a proven digital marketing agency with an impressive track record and would love to lead your business to increased revenue & growth via the Power of Digital!

HERE ARE SOME OF THE AMAZING ROI THAT WE HAVE DELIVERED FOR OUR ESTEEMED CLIENTS:

• Consistently delivering 25x ROI and 3x organic growth for an Education Institute
• Delivered 15x ROI in just 3 months for a Technology Product Company
• Consistently delivering 18x returns in a highly competitive space of Overseas Education
• Delivered 9x ROI for a Bike Seat Cover Brand

For details, check out this link: www.paarami.com/digital-marketing-case-studies

To Book a Free Consultation, visit this page and kindly fill the form:
www.paarami.com/book-a-consultation