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Friday, 1 November 2019

How to Measure and Improve Your Digital Marketing ROI

digital marketing ROI

What is Digital Marketing ROI?

Digital marketing ROI is the measure of the profit or loss that you generate on your digital marketing campaigns, based on the amount of money you have invested.
In other words, this measurement tells you whether you’re getting your money’s worth from your marketing campaigns. If you have a positive return on investment, it means that your campaigns are bringing in more money than you are spending on them.

digital marketing ROI
How to Measure Digital Marketing ROI

1. Conversion Rate

Conversion rate is one of the most popular metrics used to track return on investment over time. If the goal of your marketing campaigns is to convert, then conversion metrics will tell you how well you are accomplishing this goal.
This then tells you what you are doing well and where you can allocate your resources for better results and improved return on investment.
When it comes to conversion rates, there are a couple of things that you’ll want to look for.
One of these is conversion rates by channel. Knowing where your traffic is coming from is only half the battle.
You also want to look at which channels are converting the best. If you find that some of your channels convert better than others, then you may want to invest more in these channels to help improve ROI.
conversion channel
You should also look at conversion rates by device.
If you find that one device has less than stellar conversion performance but high traffic rates, then it’s time to reevaluate your campaigns for that device.
For example, mobile often brings in a lot of traffic. But many brands have a difficult time converting mobile users. When you see this trend for your own business, then it’s time to start re-thinking your mobile digital marketing campaigns.
conversions by device

2. Cost Per Lead

If the goal of your digital marketing campaign is to collect new leads for your sales team to close, then you need to measure how much you are paying for each new lead. This will help you determine what your return on investment is for that particular campaign.
cost per lead
To calculate cost per lead, divide total ad or campaign spend by the total number of leads attributed to that campaign. If you find that the cost of each lead is more than what you can produce when closing these leads, then you are not getting a positive return on investment.

3. Lead Close Rate

It’s also important to monitor your lead close rate. This is something you may already be doing on your own. But there’s a good chance that this information isn’t being integrated into the online analytics you collect.
Keeping an eye on your lead close rate gives you a better idea of how effective you digital marketing campaigns really are, which contributes to your return on investment.
Check your lead close rate against the leads that are being generated. This will help you understand how profitable each of your marketing campaigns are.
You can also use this information as a benchmark for new digital marketing campaigns. If you find that new campaigns are closing leads at a lower than average rate, it may be time to make some adjustments.
And if you have a sales person or a business development manager, then you should also keep an eye on this metric. This ratio will help you evaluate whether they are effective in what they are doing. It tells you the percentage of the leads they get that actually converts to sales. Although there are other things that could determine their effectiveness in their work, this lead close metric is definitely one of them.

4. Cost Per Acquisition

Your cost per acquisition tells you how much it costs on average to acquire a new customer. To calculate cost per acquisition, divide your total marketing costs by the number of sales generated.
cost per acquisition
Knowing how much it costs to acquire a new sale helps you better understand your return on investment. If you are spending more to acquire a customer than they actually bring in to your company, you have a negative return on investment. This suggests that you need to revisit your marketing campaigns and find ways to lower your cost per acquisition.

5. Average Order Value

Average order value (AOV) is another important metric that can help you better understand your digital marketing ROI. This metric tracks the average dollar amount that’s spent when a customer places an order. To calculate AOV, you’ll divide the total revenue by the number of orders.
While every business wants to see the number of orders increase over time, it’s also valuable to pay attention to the average value of each order. Being able to increase the average value of an order by even a small percentage can result in thousands of dollars of new revenue!
Improving AOV is often as simple as providing a better user experience or more effectively showcasing up-sell or cross-sell opportunities.

6. Customer Lifetime Value

Customer lifetime value is a vital measurement for understanding your digital marketing ROI. This metric tells you what the average consumer will spend over their lifetime as a customer.
Though initial customer acquisition costs are important, using this metric as well will allow you to get a better understanding of a customer’s overall value.
customer profitability
For example, let’s say that it costs you $100 to acquire a customer. And that customer makes an initial purchase of $100. At first glance, this doesn’t provide you with a positive ROI. However, if this same customer spends $100 every month for the foreseeable future, then the initial $100 investment was well worth it.
When you look at the long-term profit that you can stand to gain from a customer, it gives you a new perspective on initial acquisition costs and your ROI.
Of course, you won’t come out at an initial loss for every first-time customer. But the ability to see beyond their first purchase gives you a more accurate outlook on ROI.

ROI Using Digital Marketing Tactics


  • Email – Open rate, click-through rate, bounce rate, unsubscribe rate, conversions, and leads acquired.
  • Social Media – Engagement rates, clicks and click-through rate, conversions, leads acquired, and new fans or followers.
  • Landing Pages – Traffic, unique visitors, returning visitors, total page views, time spent on page, actions taken, and conversions.
  • Blogs – Traffic, clicks, time spent on page, unique visitors, returning visitors, actions taken, and conversions.


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