- A great way to understand the success of your digital marketing efforts is to measure key metrics.
- There are 7 key metrics to measure digital marketing success.
- Get your calculator out! Here’s how to calculate ROI.
This is part one of a two-part series on digital marketing ROI in 2022. For part two, check out 5 Digital Marketing Strategies With High ROI.
In the digital age, businesses have more opportunities than ever before to reach their target markets. However, with so many options available, it can be difficult to know which strategies will provide the highest return on investment (ROI). We’ll help you understand digital marketing ROI inside and out.
What is Digital Marketing ROI?
With so many different aspects of a digital marketing campaign, it can be difficult for a sales team to know which ones are contributing to the campaign’s overall success or failure. This is where digital marketing ROI comes in—it’s a way of measuring how effective your digital marketing efforts are, and determining whether they’re worth investing in again.
ROI is a metric that measures how much money companies can expect to earn from digital marketing strategies compared with how much you spend on them. The higher the positive ROI, the better!
Your digital marketing campaign will be stronger and more profitable when it’s regularly monitored and measured for its effectiveness.
Important Metrics in Digital Marketing ROI
Your marketing agency is ready to get down to business and dig into the details, but where to start? How do you determine what’s really driving your online marketing campaign’s ROI? Get ready to take notes—we’ll walk you through it step by step.
Here are the seven key metrics you should focus on when measuring digital marketing ROI:
Conversion rate is the percentage of website visitors who take action, such as filling out a form on your landing page or buying something. Traffic is great, but this metric is preferred by expert marketers because it’s a good indicator of how well your digital marketing efforts are converting browsers into buyers.
Cost Per Acquisition
Cost Per Acquisition, or CPA, is how much it costs to get a customer, including advertising expenses and the cost of goods or services. It’s important because it can help you determine whether digital marketing is more expensive or less expensive than other channels, such as print advertising or television commercials.
Cost Per Lead
Cost Per Lead, or CPL, is how much it costs to get a lead, including advertising expenses. This metric is worth investigating because digital marketing (including social media advertising) can be a good way to generate a greater number of leads at a lower cost than traditional channels, such as TV and print.
Return On Ad Spend
ROAS (return on ad spend) measures how effective your digital marketing campaigns are in driving revenue. It’s a report calculated by dividing the total revenue generated from ads by the amount spent on those ads.
Customer Lifetime Value
CLV (customer lifetime value) is a prediction of the net profit attributed to the entire future relationship with a customer.
Unique Monthly Visitors
In a nutshell, this indicator reveals how many distinct people viewed your website in a month. This is one of the simplest metrics you can measure, as many digital marketing techniques aim to boost website traffic from search engines.
Traffic Generated by Channel
This metric involves analyzing the traffic generated by different digital marketing sources. A careful analysis will give you a clear picture of which channels or marketing activities are driving the most traffic.
If your SEO marketing efforts are paying off, you can tell by looking at how many people clicked on your site from organic searches. Alternatively, if referral traffic is your main source of traffic, you’re probably getting results from content marketing and link building.
You can find the data on traffic generated from different sources with the help of Google Analytics.
How to Calculate Digital Marketing ROI
Intimidated by marketing ROI formulas? Don’t worry, the basic ROI calculation for digital marketing is simple. The following formula is used across the industry:
ROI = (Revenue acquired from digital campaign – Cost of digital campaign) / Cost of digital campaign
Increased traffic and conversions are typically the main goals when doing digital marketing, but it should all add up to increased revenue in the long run.
You’re probably wondering, what is a good digital marketing ROI, relatively speaking? Well, most digital marketers strive for an average ROI of 5:1—a measure of profit that’s $5 gained for every $1 spent on a marketing campaign. This is considered slightly above average by industry standards.
Of course, you can strive for higher performance results! Exceptional marketing ROI is considered 10:1 or greater. Now that you’re familiar with digital marketing ROI, you’re ready to learn about the top strategies in 2022.
Check out part two of this two-part series, 5 Digital Marketing Strategies With High ROI.