Calculating ROI in marketing is difficult, but essential. Here’s how.
Before the pandemic, marketing experts predicted that companies would spend 14.4% more on Search Network ads in 2020. But online search queries plummeted at the start of the pandemic, so marketers didn’t get as much return on their investment from paid search ads as they expected. Despite the lingering pandemic, however, marketers still expect a 5.9% increase in Search Network advertising spending in 2021. Why? Because the pandemic has permanently changed the way people shop, placing more emphasis than ever on e-commerce and therefore increasing online searches.
Such a profound change underscores the importance of knowing how to measure the ROI of digital marketing spend. The measurement of digital ad spend is constantly evolving with the marketing and technology landscape. And just because an investment in paid search wouldn’t have generated as much return on investment in 2020 as it will not be in 2022. By measuring the return on investment of each tactic in your marketing mix , you can see what is and what is not. work for you and make the necessary changes to your campaigns to generate more income.
To illustrate this point, consider a client I worked with who complained that they only got three leads in a month. Back then, however, we were optimizing their marketing budget for ROI, so we saw how much revenue each lead actually generated. In fact, one of the leads amounted to a $ 3 million sale. The customer was happy, but he wouldn’t have been if we had only shown all three leads rather than the specific ROI.
Of course, it’s important to measure KPIs (such as number of conversions, conversion rate, and cost per conversion). But measuring marketing ROI is what really matters to your business’ bottom line.
How to measure the ROI of your marketing spend
So how do you measure the return on your marketing investments to ensure you get the best results? Marketing ROI analysis is all about organizing and tracking your data using attribution. Marketing attribution helps you determine the touchpoints that potential customers use on their journey to conversion. Essentially, it measures the money you make on each marketing tactic, campaign, and channel, giving you a better idea of which parts of your strategy are successful and which need to be revisited for better ROI. Here are the best attribution strategies to use to measure your marketing ROI:
1. Use a robust CRM that allows for personalization.
Your customer relationship management platform measures how your customers and prospects interact with your business online. If you’re wondering how to measure ROI on marketing spend, start with attribution here. An advanced CRM that gets as much information about customers as possible lets you learn more about your audience’s journey.
Integrating the data you collect from your CRM with your point of sale and marketing data can provide the most accurate ROI calculation on the revenue generated by digital ad spend for a specific campaign. For example, you can see how the ROI changes for Facebook when running a Facebook campaign with a display campaign. You can also collect ROI information for a Facebook campaign that runs alongside a paid search campaign. Then you can see not only the total ROI of the two campaigns added up, but also the ROI changes when running other tactics and channels in parallel.
2. Don’t forget your tracking items.
Tracking elements like Urchin tracking module codes or shortcode URLs isolate leads by source in both Google Analytics and your CRM. By tracking each website visitor based on how they were referred to your site, you can better measure the success of your digital campaigns and determine which channels are expected to drive the most spend. In addition to the primary source, track each conversion using forms with tracking elements, as well as call tracking. This allows you to better analyze your form submissions, website views, etc. You can also measure the leads or sales that come from these channels.
For example, suppose someone comes to your site after viewing one of your company’s paid search ads, but doesn’t convert. A week later, they come to your site through a direct Google search and download one of your eBooks. After receiving an email regarding the eBook, they finally contact you and become a customer. Each of these channels played an important role in securing the customer. But without the proper tracking and attribution elements, you wouldn’t know that they delivered a return on your investment.
3. Look at digital ad spend and revenue generated by tactics.
Analyzing digital ad spend and tactic-generated revenue helps determine the ROI for each of your tactics, as well as the total ROI for each multi-channel marketing strategy. Perform this audit at least quarterly to get the most accurate marketing ROI analysis. This is especially important if you have a long sales cycle, which can make it difficult to analyze ROI for a specific month. After all, most leads generated in a month probably won’t convert until two months or more later.
With a quarterly review, you can get a complete picture of your campaign results and thus decide where to spend your time and resources next quarter. Over time, this should increase your marketing ROI.
Ultimately, businesses spend money on marketing to increase their revenue. By understanding how to measure the ROI of your marketing spend, you’ll be able to see which campaigns, channels, and tactics are driving that essential profit. Then you can keep what is working and ditch what is late.
If you want more tips for relating your digital ad spend to results, download my free business webinar: “Maximize your marketing ROI in 2021. “