Digital Marketing makes up 51 percent of U.S. ad spending, totaling over $100 billion in 2018 alone. Advertising plays a bigger role in everyday life than one may realize. Fortunately for business owners, this means opportunities for growth are everywhere. Ready to put that marketing budget to good use? It’s important to know if investing in marketing campaigns is ultimately paying off.
What is digital marketing ROI?
Digital marketing Return on Investment (ROI) measures profit (or loss) and helps businesses ensure that they’re not throwing money at ineffective marketing tactics. Taking a look at your ROI is the most effective way to tell whether or not you’re making the most of your digital campaigns.
One of the easiest and most user-friendly tools available to business owners is Google Analytics. Google Analytics exists to analyze your site's traffic in three steps. Simply sign up, paste in your personalized tracking code into the back-end of your business website, and let Google teach you about your audience and engagement.
With so many different methods of digital marketing at your disposal, deciding on which ROI metrics to focus can be daunting. Here are a few to keep an eye on, and how to use the information to boost your digital marketing ROI:
Conversion Rate is the number of users who took an action on your site of all who interacted with your digital marketing campaigns. This is a metric identified by each business and can include number of page views, form fills, completed purchase, etc.
Measures the performance of each conversion to assess success or identify areas of improvement.
Use the data provided by Google Analytics to see where your ad campaign/website is lacking in engagement and optimize it.
Conversion Rate by Device is the same as conversion rate, but isolated to computers, tablets, or mobile phones.
Narrows data by device to comprehend how most people are accessing your website.
Use the Acquisition Device report to determine whether more of your conversions are being made via mobile, desktop, etc., and focus marketing efforts accordingly.
Cost Per Lead is the amount it costs to reach each person based on the cost of campaigns you’ve picked.
Determines ROI for each specific campaign by providing a tangible amount to assess how much money is appropriate to spend on acquired leads.
Lower your cost per lead by knowing your target audience and getting specific with ad campaign with the Audiences Segment in Google Analytics.
Cost Per Acquisition tells you how much it costs to acquire a new customer; found by dividing the total amount spent on marketing by the number of sales your campaign has generated.
Measures the income impact of a campaign.
The easiest way to lower your CPA is to use information from Google Analytics to optimize your landing page. If customers like what they see after clicking an ad, they’re more likely to stick around and make a purchase.
Customer Lifetime Value is how much the average consumer will spend over their entire time as you customer.
Helps you understand the worth of each customer to increase the amount customers are spending on your business.
Open the Lifetime Value report in Google Analytics to see how your top paying customers were acquired. It may be worth it to pour more money into marketing campaigns successful in gaining high valued customers in the past.
Lead Close Rate tells you how many potential customers are being converted to actual customers.
Visualize your users' paths through your site with the Users Flow report in Google Analytics. Use the results to determine how to keep users on your website for longer periods of time, increasing your chances of making a sale.
ROI metrics and better decision-making
Understanding these metrics and setting specific, measurable, achievable, realistic, and time-bound (SMART) goals will be helpful in tweaking your campaigns to encourage more growth for your business. How do you accomplish this?
Based on your findings, run A/B tests on different aspects of your digital marketing campaigns to see which elements provide better results. An example would be changing the wording of the “call-to-action” button on your home page. After watching analytics for a month or so, you can determine which wording creates a better conversion rate. Just be sure you don’t make too many changes at once. If your numbers get better or worse, it might be hard to pinpoint the cause.