How to improve ROI in digital marketing. That’s always the big question. No one really wants to spend money on a fruitless investment, right?
Marketing without calculating your ROI is like playing a professional sports match without keeping score. It only causes a lot of wasted energy and confusion.
Today, we live in a data-driven world, with an endless variety of data-gathering tools at our disposal.
However, having these tools is one thing, but how do you use them to measure and make sure that you getting the most out of your marketing efforts?
So, What is Digital Marketing ROI?
Just like the name would suggest, Return on Investment (ROI) is simply the measurement of the return you get from your marketing efforts. The whole aim of a marketing campaign is to generate leads that turn into sales that turn into profit, right? So, if your total profit generated from your campaign exceeds that of which you spent on it, that would be considered a positive ROI. On the flip side, if what you spent on the campaign remains to be more than the profit you generated from it, that is a negative ROI and we suggest it’s time to take another look at your marketing campaign.
How To Calculate ROI in Marketing
Let’s get down to the nitty-gritty and discuss how a basic digital marketing ROI is calculated. Don’t worry, it’s easy enough for the non-math wizards out there.
The formula is as follows:
Let’s use a quick example to showcase this formula in action:
Say that your total revenue from your campaign was $20 000, but the total cost of your campaign (don’t forget to add everything, not just how much you spent promoting it) was $15 000. Your formula would then look like this:
In this case, your ROI is 33%. With us so far? Great!
Currently, the general rule is that a marketing campaign should aim for an average ROI of 5:1 – meaning that for every $1 spend you should be getting a $5 return to consider your efforts a success. Any ROI of 2:1 and below is generally considered a negative ROI. However, a successful ROI is dependent on a variety of factors such as market demand, cost structure, competition, the industry, and of course, what your goal is. Therefore it’s important to set realistic business goals and expectations for your campaign and measure ROI against the right metrics – just remember that vanity metrics don’t necessarily pay the bills.
Strategies To Improve ROI In Digital Marketing
We’re sure by now your burning question is, “Ok, so what can I do to increase my ROI?”
Well, we are happy to say we have a few actionable digital marketing strategies on how to improve ROI in digital marketing.
Keep your full funnel in mind
Funnel optimization budgeting is very important to increase the ROI of your bottom line.
A common mistake that businesses and marketers make is that they don’t allocate their budget throughout the whole sales funnel. It all goes towards awareness but misses out on the other important touchpoints of the journey and therefore you don’t get your bottom line met. Sometimes (though not always) that budget could be better spent on nurturing the leads that you already have rather than trying to break the ice with new prospectives from scratch.
Leverage automation technology
Time is money, so save it where it counts. Automating processes using marketing CRM software is one of the simplest methods to boost your digital marketing ROI. Automation frees up time that can be spent on more important marketing areas, saving your company money in the long term.
Create Content Your Target Audience Wants
The average person is bombarded with hundreds of ads each day, to a point where it all becomes noise to them. So if you want to stand out and go from noise to a melody that sticks in their head, you’ve got to create content that truly resonates with them and leaves an impression.
How do you do that? Listen first, market later.
Read reviews, conversations, and comments to find out what they are really looking for in a product or service like yours. Once you identify their needs and/or wants, you can tailor your strategy around them – and before they know it, you’re the hero that they’ve been searching for the whole time.
Sometimes small tweaks make big differences. A/B testing is when you change one element of your campaign and see how it compares to a different version of it. This method lets you see which campaign strategy works best so you can figure out the best way to improve your marketing efforts.
Depending on the marketing channel, these elements can include:
- Calls to action
- Post copy
- Layout and design
- Navigation links
Spring Clean Your Data
All data is good data, but clean data is powerful data.
Incorrect data entry, in most cases, is the root of all evil – or at least when it comes to measuring ROI. It’s impossible to maintain a healthy database if your process isn’t filtering out bad leads from the get-go. Ensure you have a Standard Operating Procedure (SOP) in place for data collection to reduce human error when collecting data. Alternatively, you could, ahem, use a marketing automation tool to effectively streamline and filter the point of data collection.
Need a little extra help to improve Digital Marketing ROI?
Need more hands-on help to set up your campaigns up for ROI Success? Or perhaps you need an expert audit? Our full service digital marketing agency would love to help. Contact us to set up a free consultation with our marketing experts.