How to Measure Marketing ROI
Truth: any marketing campaign that doesn’t provide value to a business is a waste of time, money, and effort. For this reason, it is important to evaluate campaign performance, so you know whether your marketing efforts are successful or not.
Marketing should be data-driven, focusing on efforts that will improve an organization’s bottom line. Sure, several key performance indicators are available to marketers these days, but none is more important than Return on Investment (ROI).
Marketing ROI is perhaps the simplest way to determine if a marketing strategy is profitable or not. It compares how much money you’re spending on marketing versus how much you’re making as a result of your marketing efforts. For instance, if you spent $1 and got $2 in return, your ROI would be 2:1.
But what is a good marketing ROI? It depends. Every industry and business is unique, which means the ideal marketing ROI is specific to your business and it’s goals. There’s simply no one-size-fits-all approach or magic number to hit.
In this article, we’ll cover everything you need to know about marketing ROI, including:
- What is ROI?
- Why it’s important to measure ROI
- How to maximise ROI
What is ROI?
ROI is a financial metric that determines how much money something is making. For example, if you bought digital ad space for $10 and made $50 in sales, your ROI is 5:1.
In general, the ROI metric can be applied to several aspects of a business and its operations, such as marketing or advertising as well as loans or investments.
There are also different types of ROI you can measure. There’s simple ROI, which is a very basic ROI calculation. It compares how much your sales have grown against your marketing costs during a period of time.
A simple marketing ROI analysis can be expressed as the following equation:
The simple ROI calculation is basic, lacking largely in context. It only provides a surface-level view of what’s going on. It doesn’t accurately tell us if the marketing efforts have been successful. It assumes all the growth in sales is due to that marketing campaign.
What we need is a campaign attributable ROI calculation. We need to determine a benchmark for organic sales growth for the period before the marketing campaign in question. You can look back at the last year to uncover average monthly organic sales growth.
This figure will help you better understand how much of the sales growth is actually attributable to the marketing campaign. The equation to determine this campaign attributable marketing ROI analysis looks like this:
These are just two ways that you can calculate marketing ROI. As mentioned earlier, each marketing strategy and channel used is unique, requiring its own process to determine ROI.
While it’s easy to determine return on investment for digital advertising, it’s harder for content marketing efforts. It can be hard to attribute sales to blog posts, social media content, and emails. But this doesn’t mean that they don’t provide a business value.
With these more difficult to determine strategies, it’s important to measure success in ways other than ROI and money. Content marketing strategies can help build consumer awareness and interest in your brand and it’s product and/or service.
For example, blog posts can help generate website traffic, build brand awareness, and generate more leads. A customer’s journey is a long process that involves multiple touchpoints. Marketing efforts aren’t solely about short term profits but long term gains.
Why It’s Important to Measure ROI
For a business, measuring marketing ROI offers several advantages:
- It helps to validate and justify the amount of money provided in the marketing budget. C-level executives want to know if the organisation is actually profiting from the investment.
- Strategy-wise, marketing ROI can help identify what’s working and what isn’t. Organisations are better able to forecast, project, and plan out their marketing strategy when ROI is measured.
- Marketing ROI also provides a competitive benchmark that organisations can use to compare themselves to competitors. It’s also a benchmark that can be used to hold themselves accountable.
How to Maximise ROI
Now that you know what ROI is and why it’s important, it’s time we discuss how to maximise ROI. Because ROI can apply to all marketing strategies and channels, these tips will vary.
Here are 10 ideas to improve your content marketing ROI:
1. Focus on metrics that matter
If you want to maximise ROI, you should focus on the important metrics, not vanity metrics. Vanity metrics are just for show-off but tell you little about your own performance.
Examples of vanity metrics include:
- Email subscribers
- Marketing spend
- Likes on social media
- Trial users
Instead of focusing on the above metrics, try using these instead:
- Conversion rate
- Email opt-in conversion rate
- Return on marketing investment
- Engagement on social media
- Converting users
These important metrics will tell you more about the performance of your organisation’s marketing efforts. In addition, you’ll be able to better understand where you’re falling short.
2. Create SMART goals
There’s more to marketing than just short term ROI gains. Other goals/objectives can position you for long term success. The truth is, outside of digital advertising, most marketing strategies take time for a return on investment to appear.
Considering this, you must create clear, concise, and effective goals for your marketing campaigns. What other things are you trying to accomplish that’ll eventually lead to more customers and sales?
For example, you should try to use your content marketing to convert readers into subscribers. Your blog posts can attract people from any channel by using a lead magnet to funnel them into your email list. Your goal here would be conversion and list-building.
To create high-quality goals, you’ll want to adhere to the SMART framework:
- Specific: Your goal must be precise about what you wish to achieve. You must avoid vague, unfocused pursuits; the goal should be easily identifiable.
- Measurable: Your goal must be trackable. You must be able to assess performance and progress towards accomplishing the goal.
- Achievable: Your goal must be realistic and achievable. Unrealistic goals are a waste of time and serve no purpose.
- Relevant: Your goal must relate to the nature of your business.
- Time-based: Your goal must have a deadline. Any goal without a timeframe is unfocused and unlikely to be achieved.
An example of a SMART marketing goal would be to increase email subscriber list size by 25% within 12 months. The goal is specific and measurable,realistic, relevant, and time-based. It’s a long term goal that, in time, will improve marketing ROI.
3. Audit your expenses and decrease costs
Maximising ROI isn’t just about making more revenue, it’s also about decreasing expenses. Your ROI will increase if your costs go down. Remember, it’s “return on investment.” Emphasis on the investment part.
There’s are several factors that contribute to your marketing expenses, regardless of what strategies and channels are used. For instance, social media posting might seem very low-cost, but you still have to account for labour costs. Someone must post and interact on social media.
4. Create audience/buyer personas
With regard to marketing, you must know who you’re targeting. You must spend time putting together detailed audience/buyer personas that outline who exactly it is you’re trying to reach.
These audience/buyer personas should include demographic information, such as age, employment, and gender. It should also include geographical location, spending habits, interests, and challenges.
These audience/buyer personas are for individual persons; you’re creating mocks of your typical target audience. Doing this will help you with your positioning, which should help make it easier to satisfy their needs.
5. Use audience segmentation
Your target audience is not a monolith, that’s why you’ve created multiple audience/buyer personas. Not all forms of your marketing content will appeal to all—they’re different persons. They’re also at different stages on the customer journey.
Your content must appeal to all the different segments within your audience. The easiest way you can do this is through your email marketing efforts. Emails can be created and sent for individual segments of your email subscriber list.
6. Outline your customer journey map
Your customer journey map is the path your customer goes through, from a prospect to a lead, then a customer. This will involve multiple touchpoints, such as your website, your emails, social media profiles, and other channels.
Mapping out your customer journey will help you get a better understanding of how to optimise these touchpoints. It’s like a roadmap for your entire sales funnel. It can help you understand how your business generates, nurtures, and closes leads.
7. Use multiple channels to repurpose content
One of the best ways to get more out of your content is to repurpose it on different channels. For example, you could repurpose a blog post into an email, a video script, social media posts and videos, or even an eBook.
Maximising your ROI is more than just boosting conversion rate, it’s about finding smart ways to get more from less.
8. Create content that satisfies search intent
To maximise ROI from your content marketing, specifically your blog posts, you must create search intent-aligned content. This means that what you’re writing is actually what people are searching for on Google.
For example, if you type “SEO tool” into Google you’ll notice all the top results are list-based content. You’d think people would be looking for an SEO tool to buy, what they’re actually looking for is information. They’re researching the best available SEO tools out there.
What does this mean? Well, if you wanted to actually rank for that keyword, you’d create similar content to what’s already ranking on the first page. There’s no point in creating something if that’s not what they’re searching for.
Concerning ROI, if you’re not ranking on Google, you’re not getting users on your website. When you’re not attracting users to your website, they will not convert into a customer.
9. Be active on social media
Social media is an easy way to get more out of your content. Whenever you create new content, make sure to post it with your social media profiles. What you’re doing is effectively promoting your content and expanding its reach. It’s a great way for you to get the ball rolling.
10. Contact a specialised digital marketing agency
Maximising your ROI through the strategies above can take time, effort, and money. While all these are doable, it is recommended that you reach out to experts in the field. You probably don’t have the time to invest, anyway, as you’re busy running a business. Why not outsource and seek the services of a specialised digital marketing agency?
Want to get started? Get in touch with a digital marketing agency now!
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