Commonly, now people prefer to buy stuff online. Digital marketing is a company’s marketing bullet unless it is not regularly measured and constantly tweaked. One of the easiest and best ways to measure these efforts’ effectiveness is through calculating the ROI (rate of investment). After all, it’s a waste to invest in expensive marketing endeavors if they are unable to generate sales.
The emergence of computers and the World Wide Web gives a marketer a new scope to reach the customer online globally. Now a day, the majority of customers access the web on smartphones, tablets, ad laptops – digital marketing has become an essential and valuable part of the business marketing plan. In the old-time, the ROI was calculated in terms of sales and revenue. Companies do not think about progress and result regarding the marketing efforts. If the sales hike, the company iterates their marketing efforts without any improvement, and when sales drop, the marketing managers stops the strategy and try something else.
Now, the marketer measures the current campaign with the campaign return on investment. To calculate the ROI of digital marketing does not require any sophisticated tools.
Calculate the ROI in digital marketing:
ROI is calculated from profit that resulted from the digital marketing campaign to how much the campaign cost and deploy. The basic return on investment calculation is:
ROI = (Net profit/Total cost)*100
The calculation of return on investment won’t mean much if your company doesn’t have any goals and objectives. Inaccurate data in your calculation, measure the wrong KPIs.
Following are the tips that keep in mind before calculating a campaign’s ROI.
- Have A Proper Understanding Of Your Objectives/Goals
If you are confident enough that your digital marketing strategies bring revenue for the company. Marketers are drawn to appeal to the ROI of their work, but ROI is not the only metric the business access for the success of your efforts. This is why you need to understand the unique marketing objectives before deploying any marketing strategies.
2. Recognize The Key Performance Indicators
Everyone has different business from their competitors in your location, market, and key performance indicator. In case you try to use the key performance indicator of other organizations, you end with data that is not useful. The common KPI are:
- Cost per lead
- Unique monthly visitors
- Cost per acquisition
- Return on Ad spend
- Average order value
- Lead to close ratio
- Customer lifetime value
- Average position
- Branded search lift
- Non-brand CTR
3. Make Sure Your Data Collection System And Methods Are Unique
To calculate the accurate KPIs, your data collection methods must collect clean data. If there are any inconsistencies regarding transferring, entering, collecting, or calculating data, you will end up with information that skews your KPI and ROI.
Wrong KPIs are not useful in estimating how effective digital marketing efforts were in finding, attracting, and converting online customers. Before calculating the data, be sure to identify KPIs you want to access. These KPIs will align with the overall marketing strategy, objectives, and goals.