How do you know you’re getting the results from your marketing that you’re paying for?
You have the measure the return on investment (ROI). Your digital marketing ROI will help you understand where your marketing is doing well and where it’s underperforming.
Several metrics will help you in measuring the ROI of your digital marketing. Knowing what to track and what to ignore is vital to your marketing success.
Why Measure Digital Marketing ROI?
93% of Chief Marketing Officers (CMOs) feel they are under significant pressure to deliver measurable return on investment. Measuring returns helps show the value of your marketing efforts to company leaders.
If an element of digital marketing is going well, you can invest more money in that method. If another tactic is underperforming, you can reduce your investment. Either way, measuring helps you adjust your strategy.
Return on investment is a way to hold the marketing department accountable for their spending. Become an expert at showing leaders the positive impact of digital marketing. You will be an incredible asset to your organization.
Analyze the Data You Generate
In the course of marketing, gaining customers, and providing customer service, your company generates an enormous amount of data. Unfortunately, many businesses struggle to turn data into understanding and understanding into action.
Your organization can be different. By knowing what parts of the data you generate are important, you can zero in on how effective your digital marketing really is.
As you gain understanding regarding what parts of digital marketing bring growth in your industry, you can develop key performance indicators (KPIs) to track. By knowing your KPI performance through each month, quarter, and year, you can predict your digital marketing ROI.
Skip the Vanity Metrics
A vanity metric is something that makes you feel good but doesn’t lead to any sales or growth in your organization. Social media “likes” are a vanity metric. Unless a prospect takes action to engage further with your company, that “like” means nothing.
Other vanity metrics include:
- Website traffic that is not linked to sales behavior
- Shares of your social media posts, especially non-product related posts
- New followers on social media accounts
It not that these things never eventually lead to sales. It’s that focusing on these metrics as a measure of success is misguided. You need to look further down the funnel for indicators of success. You should focus on metrics more directly related to sales and growth.
Measure Mid-Funnel Engagement
Engagement at the top of the funnel simply builds awareness. However, engagement activity with mid-funnel elements produces customers. Mid-funnel engagement is worth measuring.
Some examples of mid-funnel engagement include:
- Downloads of free product guides
- Case study downloads
- Visitors to a sales page
- Opens of sales or product-related emails
Measuring increases in this type of engagement can help you understand where sales are coming from. When you can connect this activity to growth and revenue, you have a great way to measure digital marketing ROI.
Obviously, conversions from digital marketing have a direct return on investment. It can be hard to know exactly how much the social media presence and engagement played into a conversion. Nonetheless, you can track direct conversions.
Direct conversions may be sales, but they don’t have to be. Consider the following metrics as well:
- Clicks to a landing page
- Clicks on a social media ad
- Sign-ups for a promotional webinar
- Calls to your sales line using a promotional code from an online ad
You can often draw a direct line between these activities and revenue, so they are an excellent part of your digital marketing ROI.
Measure the Performance of Various Channels
When you use unique promotional codes, you can track where your inquiries and sales are coming from. You can link one promotional code to a pay-per-click (PPC) ad, and another to a Facebook promoted post.
If you notice that one referral code or link is doing exceptionally well, you can double down on that effort. You can also evaluate how you set up that campaign and replicate the approach in other areas.
Some channels that you can measure to determine digital marketing ROI include:
- Direct traffic
- Organic search
- Customer referrals
- Social media promotion by platform
Knowing what channels are getting you the conversions you need will help you hone your strategy. It will also give you valuable insights into your customer base.
Make Your Data Relevant to Management
As a marketer, you understand how important the digital world is. In fact, you may really enjoy the details of how social media works. Digging into online platforms and digital marketing strategy is probably your strong suit.
It’s highly likely, however, that your managers feel differently. They may not understand the digital world very well, but they don’t really need to. Unless you have a passionate manager, you don’t need to explain it.
Instead, translate your data into the dollars-and-cents language that your leaders speak. When you can describe digital marketing in terms that make sense, you’ll win support for your ideas. This can make you very influential in your company.
Make sure you present data in a way that is simple, to the point, and easy to understand. Show your leaders what you’re doing and the digital marketing ROI it's creating. Make clear recommendations backed by data. And when they sign off on it, you can go back to enjoying all the details.
ROI Is Essential to Marketing Success
Industries change quickly, and companies must be ready to adapt. No organization can afford to waste time and money chasing vanity metrics. A company must use a digital marketing budget effectively.
The only way to justify your leaders’ investment in digital marketing is to create KPIs that are related to real success and growth. When you track mid-level engagement and conversions, you’re on the right track. When you understand how each channel affects your results, you’re a rockstar.
If you’re interested in understanding how to make digital marketing work for your company, we’re here to help. Contact us for a free consultation today!