Measuring the return on investment (ROI) is an issue for many businesses pouring funds to support their digital marketing endeavors. Nearly half of businesses investing in digital marketing have no procedures, and if they do, they are not utilized properly.
After all, it can be difficult to figure out when a lead is actually converted to a sale/new customer or whether someone is a customer, but they have no online engagement. It can be a challenge to determine which factors should be monitored at all. For example, how do you take into consideration someone purchasing your product six months later after they saw a post on a friend’s site? It’s hard to trace the direct links and influences.
However, that doesn’t mean no effort should go into at least trying to monitor your digital marketing campaign’s success.
To go about measuring ROI, you should first have a set of ROI goals. Some examples include an increase in purchases, an increase in followers on a social media platform, and leads. These goals are measurable once a value is assigned to them.
However, according to Bernard San Juan III, Truelogic Inc.’s Managing Partner, there is no fixed formula for digital marketing goal setting.
San Juan mentions that a business’s key performance indicators (KPIs) vary based on which part of the customer journey the brand is trying to influence.
Some top-funnel metrics include brand searches, search impressions, keyword rankings, and traffic. Mid-funnel metrics include repeat visitors and social engagement (e.g., likes, follows, community participation). Meanwhile, bottom-funnel metrics include subscribers, calls, inquiries, appointments, bookings, sales, cross purchases, and cart recoveries.
“Although for SEO, the expectation is generally between 12x revenue to 21x revenue versus spend,” he explains. “Of course, the greater the margin of a sale, the less that multiplier has to be, and the smaller the margin, the greater the multiplier.” For example, if your investment is P10,000, your revenue should hit at least P120,000 to P210,000.
Why should ROI be measured anyway?
Even if your page or website may be getting a lot of likes or shares, this doesn’t necessarily translate to sales and revenue. ROI gauges the success of your social media marketing efforts and tells you which campaigns are working (and which are not), which platforms you are benefiting from, and where you need to increase investment.
ROI can be measured in sales, email subscribers, traffic, downloads, brand visibility, as well as customer trust.
San Juan adds that monitoring ROI – despite sometimes being incredibly challenging to track – is important because “it’s the profits that pay for the marketing spend.” He adds: “I believe every business, at minimum, wants to break even or turn a profit from their marketing because it’s an investment activity in the business.”
What are the roadblocks to proper ROI tracking?
Confusing media metrics for digital metrics
Some entrepreneurs underestimate the significance of ROI due to a lack of understanding the value in terms of digital marketing. Meanwhile, others are more concerned with hitting a certain goal regardless of the cost (i.e., reaching a specific number of followers).
“The biggest misconception I encounter, especially for first-time digital marketing efforts, is confusing traditional media metrics for digital metrics,” San Juan shares. “I’ve both seen and been asked about what ‘CPM’ (cost per mil) of the campaign is. CPM is not a digital metric; it’s a media metric. I don’t think it’s as much a ‘misconception’ as it is a lack of understanding. Most businesses cannot tie the digital metric to the business goal and so they settle for the ‘doing’ versus the results,” he concludes.
Not utilizing tools
Another roadblock is a lack of tools, which is easily remedied by free and easy-to-use online tools. For instance, Google Search Console, when used properly, can make your site more “Google-friendly.”
Below are some useful options you can use to measure ROI.
Google Analytics
This tool tracks web performance in several ways. It obtains user data via page tags, which run in each visitor’s web browser, then sends information to one of Google’s data collection servers.
Popular metrics it offers are:
- Users (unique or new visitors)
- Bounce rate (percentage of those who looked at only one page)
- Sessions (visitor interactions occurring within a 30-minute window)
- Average session duration (how long each visitor stays)
- Percentage of new sessions (rate of first-time visits)
- Pages per session (average number of pages viewed per session)
- Goal completions (number of times visitors performed the desired action)
- Pageviews (total number of pages viewed)
Hotjar
This tool allows you to visualize user behavior through “heat maps,” which show where users are clicking and scrolling on the site. These also help see how they behave after a change is made. The tool also lets you see how behavior changes when using different devices. Recordings of user scrolling is also enabled so you can review where users spend the most time and where they spend the least. Hotjar provides the option for live feedback from users, and a question bank or templates for on-site surveys.
SEMRush
This software suite helps companies run digital marketing strategies, like SEO campaigns. It audits your on-page SEO, determines important keywords, and which keywords your competitors are using. Those with limited experience and knowledge in digital marketing will find this easy to use. SEMRush also has monthly and yearly packages on offer.
Ahrefs
This provides tools for link building, keyword research, competitor analysis, rank tracking, and site audits. It is often used by small business owners, SEO agencies, and in-house marketers, among others. Like SEMRush, it offers monthly or yearly plans.
Hard-to-measure values
Another issue is the vague nature of ROI factors. Some data points are not accurate in representing how effective your strategy is as they do not necessarily translate to your actual ROI.
Another is how much you’re spending on marketing. Apart from your marketer’s (assuming you have one) upfront fee, compute how much time is spent on administration and related factors which costs the business.
And then there are effects that can’t be measured, such as brand visibility and reputation.
What’s the bottom line?
ROI measurement is among the essential tools needed to monitor the effectiveness of your digital marketing scheme. Tracking your ROI tells you if your efforts are impacting your brand positively. While ROI factors are sometimes hard to determine and even measure, certain parameters can be set to help you gain a clearer and better visibility of your efforts, ultimately, allowing you to better form digital strategies down the line and better respond to the needs of your customers.
