There is a lot that goes into digital marketing; there are different tools and techniques, different strategies and campaigns. To ensure that you are getting as much as possible out of your digital marketing efforts, you need to understand the return on investment (ROI) of what you are doing. Otherwise, you could be spending your budget in a way that isn’t paying off, or you could be primarily focusing your attention on expensive ways of bringing in leads and sales.
Knowing how your digital marketing efforts are performing is not only important, but it’s also a key part of making informed decisions. This is why continuously measuring the ROI of your digital marketing efforts is vital. In this blog, we have taken a look at the importance of ROI, how to measure ROI and what you can do if your ROI isn’t quite up to scratch.
Why It’s Important to Measure the ROI of Your Digital Marketing
There are a lot of reasons to measure the ROI of your digital marketing, including:
- Money Well Spent – Accurate ROI measurements help you to better allocate your budget. You can channel your marketing budget in a way that maximises returns, rather than spreading it across various channels and hoping for the best.
- Resource Allocation – Measuring ROI helps you to allocate resources wisely. When you understand which digital marketing channels and campaigns are delivering the best results, you know that this is where you should be focusing your time and money. You can invest more in what works, whilst cutting back on less effective strategies.
- Improved Accountability – Measuring ROI ensures accountability for your marketing efforts. It’s about tracking how effectively your various marketing efforts are translating into results that you can quantify such as leads, sales and engagement.
- Better Insights – ROI data provides valuable insights into the behaviour and preferences of your target audience. It helps you to understand what resonates with your target market, and what they would like to see less of. Using this information, you can refine your digital marketing strategy.
- Track Your Goals – When you measure the ROI of your digital marketing efforts, you can make sure that you are on track to meet your goals. It helps you decide if any adjustments are needed to reach those objectives and if they are, what those adjustments could be.
Key Ways to Measure the ROI of Your Digital Marketing
There are a lot of ways to measure the ROI of your digital marketing. The more you measure, the better insight you will have.
- Conversion Tracking – You can set up conversion tracking on your website to measure specific actions such as how many people have completed a form, downloaded an ebook or made a purchase. With this information, you can decide if your marketing efforts are leading to a successful conversion outcome, or if changes need to be made.
- Marketing Analytics Tools – There are a variety of marketing analytics tools you can use, such as Google Analytics to track traffic sources, user behaviour and conversion rates. By tracking this information, you can see where your traffic is coming from and what source of traffic is most likely to convert. You can then focus on the sources that are most successful.
- Social Media Metrics – A lot can be gained from social media marketing, as long as you are getting out the same as what you put in. Analyse social media metrics such as engagement rate, click-through rate and social shares to determine the impact of your social media marketing efforts.
- Email Marketing Metrics – A lot of people underestimate the importance of email marketing but, when done correctly, email marketing can be a reliable source of website traffic. For email campaigns, measure metrics such as open rates, click-through rates and conversion rates. This will determine the ROI of your email marketing.
- Cost Per Acquisition (CPA) – You can calculate the CPA of your digital marketing efforts by dividing your total marketing spend by the number of conversions. This will tell you how much you are spending on each acquisition, highlighting how cost-efficient your marketing efforts are.
- Customer Lifetime Value (CLV) – It’s possible to understand the long-term value of a customer by calculating the CLV. This information will help you to assess how much a customer is worth over their entire relationship with your business. You can then focus your attention on marketing techniques that bring in customers with a high CLV.
- Return on Ad Spend (ROAS) – For paid advertising campaigns, such as PPC, calculate the ROAS by dividing the money generated by the campaign by the overall cost of the campaign. This will help you to assess the effectiveness of ad spend, and whether it was a cost worth making.
What Happens if the ROI of Your Digital Marketing Could Be Improved
If the return on investment of your digital marketing efforts falls short, you need to take action and work on improving things. Otherwise, you risk wasting valuable resources and money on marketing strategies that don’t bring in the desired result. Without optimising your ROI, you could continue to invest in ineffective marketing channels, and miss out on potential growth opportunities elsewhere.
A lot of your competitors, if not all of them, will be effectively measuring and improving ROI. If you don’t follow suit, they could take the lead and leave you at a disadvantage in the market.
By not maximising returns, you could struggle to expand your market share or reach, giving your competitors the opportunity to do so.
At Profici, we know that measuring the ROI of your digital marketing efforts can be time-consuming and complex. This is why we are happy to handle things for you. With us handling your digital marketing strategy and ROI, you can focus on other aspects of running a business. Get in touch to find out more.
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