Are you getting the desired results from your digital marketing campaigns? If you’re not sure, then you may want to measure your digital marketing ROI. Here is how you can measure your digital marketing ROI to know where it is doing well and where it’s under-performing.
How do you know that your digital marketing efforts are producing the results your desire? The best indicator of this is a positive digital marketing ROI. Measuring the results of a campaign to identify trends and improve ROI is the key to success of any marketing strategy.
For any modern-day business, investing in digital marketing is a must. This is the reason annual digital marketing spend is expected to top $306 billion by 2020. But, what’s the point if you aren’t making money, getting leads or attracting customers with your online marketing efforts? This is why learning to measure what you are getting out of your digital marketing is important. In fact, it’s as important as doing the marketing in the first place. If you don’t measure your digital marketing ROI, you’ll never know which campaigns are working and which ones are not.
The Importance of Measuring Digital Marketing ROI
Most chief marketing officers (CMOs) are under immense pressure to deliver measurable return on investment. You can show the value of your marketing efforts to company leaders by measuring returns. Moreover, this allows you to know about and invest more money in a digital marketing method that is performing well. On the other hand, you can reduce investment in a digital marketing method that isn’t doing well. Either way, measuring ROI helps you to adjust your strategy.
In addition to the above, ROI can help an organization hold the marketing department for their spending. In short, measuring digital marketing ROI can provide you with benefits that ultimately have a positive impact on your bottom line. So, how can you measure the ROI of your digital marketing efforts? This is discussed next.
Best Practices for Measuring Your Digital Marketing ROI
It is estimated that companies will allocated 35% of their 2018’s marketing budget to online strategies. Due to its higher ROI and the ability to generate greater results for less money, more businesses are shifting their marketing spend to digital. By calculating your ROI for any given digital marketing strategy, you can find out whether you’re getting your money’s worth from your efforts, and then allocate your marketing budget more effectively. So, how can you measure your digital marketing ROI? Following are the best practices for this purpose:
Analyze the Data You Generate
The process of marketing, gaining customers and providing customer services provides your company with an enormous amount of data. However, most businesses struggle to turn this data into actionable insights that help improve ROI. By understanding which of the data you generate is important, you can zero in on how effective your digital marketing really is.
As you find out which of your digital marketing efforts bring growth in your industry, you can develop key performance indicators (KPIs) to track. You can predict your digital marketing ROI once you know your KPI performance through each month, quarter and year.
A direct digital marketing return on investment are conversions from digital marketing. While it can be difficult to know how much part your social media presence and engagement played in the conversions, you can track direct conversions. While they can be sales, direct conversions are not limited to them and you many want to consider the following metrics:
- Clicks to a landing page
- Calls to your sales line using a promotional code from an online ad
- Clicks on a social media ad
- Sign-ups for a promotional webinar
Measure the Lifetime Value of a Customer
To determine this, find out how much each customer that you acquired through your digital marketing efforts typically spends with your company over the lifetime of their patronage.Following is a simple formula to measure the lifetime value of a customer:
Lifetime Transactions X Lifetime Revenue – Lifetime Expenses = Lifetime Value of a Customer
Measure the Performance of Various Channels
Following are some channels that you can measure to determine your digital marketing ROI:
- Direct traffic
- Customer referrals
- Social media promotion by platform
- Organic search
By measuring the above channels, you will know what channels are getting you the conversion, which will allow you to adjust your strategy. Moreover, it will provide you with valuable insights into your customer base.
Measure Click Through Rates
For PPC and email campaigns, click through rates are the ultimate measure of success. When it comes to email campaigns, getting extra views on your website is always beneficial. However, you must weigh up against any financial gain generates from these clicks.
There are some tools that can provide an overview of how many clicks your email campaigns generate. Additionally, they reveal how many recipients viewed your mail and how many ignored it. These numbers can help determine which of your tactics are working, while making it easy for you to calculate your digital marketing ROI.
Measure your Website Traffic
When it comes to measuring your digital marketing ROI, measuring website traffic is probably the most important thing. If the objective of your marketing efforts is to drive traffic to your website, then you need to take a few factors into consideration. These include:
- Unique site visitors versus return visitors
- The number of pages visited per user
- The time they spent on your site
- Bounce rate—the number of people that arrive and leave immediately
- Exit rate—which pages are they leaving from
A tool that can help you to determine the above is Google Analytics.By finding out the above, you can better measure your digital marketing ROI.
Want more information on how to measure your digital marketing ROI? Then get in touch with us today!
by Bobby J Davidson