July 13th, 2020
When we look at digital marketing for a business, we often look at viral content and engagement as two of the more important components to watch. However, the focus does not have to rest on these two aspects alone. There are other elements of a digital marketing strategy we need to look at to get the full story.
Defining Digital Marketing ROI
Simply put, the digital marketing ROI is the measure of the profit or loss generated through your digital marketing campaigns based on the amount of money you were able to invest.
It shows you if you have been getting your money's worth out of the investment. If you are showing a positive return, then you can assume that your campaigns are working as they should.
If you fail to measure your ROI, you cannot positively identify which areas of your campaign and business are not performing as well as they should be. Measuring ROI allows you to improve and take actionable steps toward that improvement. Google Analytics is just one resource you will find helpful.
Measuring Marketing ROI
You will find that not all digital marketing campaigns have an end goal of conversion. Sometimes, a campaign is needed to build awareness while others attempt to get customers into the marketing funnel. So, the way you measure your marketing ROI is going to greatly depend on what your goals are.
This is a popular metric often used to track ROI over a period of time. If conversion is the ultimate goal of your campaign, then this metric will tell you if you are succeeding. It tells you the areas in which you are doing well and shows you where improvement is needed for a greater ROI.
Cost Per Lead
If the campaign goal is to collect new sales leads, then you need to measure the amount you are paying for your new leads. Determine how much each lead costs by taking your total ad spend divided by the total attributed leads. If the cost of each lead ends up being more than what you can make closing the lead, then you see a negative return on your investment.
Customer Lifetime Value
To better understand your digital marketing ROI, you also need to look at customer lifetime value. This tells you how much an average customer spends over their lifetime. You are finding the net profit contribution of the customer for your company over time.
So, if it costs you $100 to acquire the said customer and they make purchases totaling $100, there is no positive ROI. However, if that customer continues to spend that amount each month, then your initial investment was well worth the cost.
These are just a few ways you can measure and improve your ROI. When looking at these analytics, identify weak areas that you can build up to improve. For more information on how to do this successfully, contact the digital marketing experts at SeedLogix today for advice and tips.