How To Measure The ROI Of Your Digital Marketing Consulting Efforts – 2023 Guide
Digital Marketing Consulting is vital for today’s technology-driven world. During the starting days of the business, measuring the exact data of ROI (Return on Investments) will pose a challenge. Still, it is essential to note that sometimes calculating ROI ahead of time may not give that productive result compared to figuring it out later.
Digital marketing consists of various channels and strategies designed and implemented to increase the awareness of the company’s brand value, boosting its visibility to generate leads, eventually converting into confirmed sales, and helping retain customers in the long run.
Whether a business is small or big, having a marketing consultant for SEO is essential for digital marketing. SEO marketing consultants help in improving the ranking of business websites and aim to ensure that the company’s products and services remain competitive enough to increase revenue. They help in internet marketing, sales, business leadership, and business efficiency.
Through various digital channels, including the company website, search engines, email promotion, promotion through social media, affiliate marketing, or even SMS text message, a company’s consultant helps the company reach its peak in developing the brand through digital promotion.
A marketing campaign includes promoting the company brand digitally in various channels, through organic or even a paid approach to boost brand visibility and convert the incoming website traffic to sales.
Sometimes looking into the long-term perspective, digital marketing campaigns will have long-term strategies, making it difficult to calculate the return generated.
Digital Marketing Measure
Due to new marketing frontiers that lead to the development of computers and the world wide web, consumers can purchase almost everything online. Most customers use tablets, mobile phones, or laptops to access the internet. Due to this, digital promotion plays a vital role in developing a company’s promotion strategies.
In traditional marketing, businesses calculate ROI by comparing the difference in a particular promotion campaign against the revenue generated. No one ever bothered to create a system that can calculate the progress and strategies of efforts spent in marketing.
Whenever the company sales increase, the business never thinks about improving the promotion strategies, but they start to change only when the sales decrease. A few things should get considered when determining ROI.
Determining Return On Investment
It is not easy to calculate the ROI of a digital marketing consulting by keying in the details in an ROI calculator. Since it is a long-term process, a few tactics may yield a small return for some time.
Determining the ROI in digital promotion comprises tracking the various channels through which the digital promotion strategy got implemented. Choosing a specific net income associated with a single promotion tactic is challenging.
It is sometimes beneficial to accept a short-term loss to generate long-term success, depending upon the exact nature of the campaign it could get done.
Calculating ROI In Digital Marketing
Calculating return on investment is done by knowing the profit from the digital marketing campaign against the cost incurred to create and implement the same.
ROI basic calculation is :
ROI = (Net Profit/Total Cost)*100
The company’s ROI won’t mean much without reasonable goals or if it has inaccurate data for calculations and measuring wrong key performance indicators (KPI).
The following factors should be considered for calculating the ROI from digital marketing efforts.
Understand Marketing Objectives
Every promotional campaign gets done because it will give a better ROI. But there are other criteria the business models should use to access the returns.
It is where the company should understand the unique objective for measuring the strategies done for the success of a campaign. Everything done for the drive will not show directly in the ROI.
Things like clicks counted on the company website, which got lead generation, will not get considered. The actual effectiveness of a campaign will only recover if everything gets calculated in terms of money.
Track Key Performance Indicators (KPI)
The company’s business should have unique differences from the competitors in the market, be it in terms of products or services provided, which will reflect the company’s key performance indicators.
Since businesses should have long-term goals, other companies’ KPIs should never get used as they will never be helpful in the long run. The few most common KPIs to consider are,
- Knowing how many visitors clicked on the company website monthly will help generate data that helps understand how many visitors were unique, paid, organic, or from social media.
- Knowing what is the cost per lead generated. It gets calculated by Google AdWords automatically.
- Money spent for getting customers should get calculated by dividing the total revenue spent on a campaign by the number of customers. It is known as cost per acquisition (CPA).
- Profits made through advertisement and the cost spent to create it is known as return on ad spend (ROAS). KPI helps calculate the profit by calculating the formula (revenue/ad spend)*100.
- Calculating average order value (AOV), customer lifetime value (LTV), lead-to-close ratio, and other factors are some KPIs to consider.
Collect Clean Data
The data collection method should be collected cleanly, as it helps measure the KPIs. If there are any drawbacks in managing, entering, and calculating the data, it will give false KPI and ROI numbers. It will never help to know how effective the digital promotion efforts were.
First of all, the relevant KPIs should get identified before collecting data. Data collection software installed will help measure the KPIs, especially if the sales and marketing teams get involved in the campaign.
See Bigger Picture For KPIs
The main goal of any marketing campaign is to increase sales, which will increase the revenue and the ROI. If the management focuses only on ROI, they will never see more considerable efforts regarding digital promotion.
Even KPIs play an essential role, but many may not correlate with the increase in ROI, but an effective digital specialist can point out a few recurring patterns.
Drawing insights from the KPIs is an excellent way to measure ROI. The cost per lead, website traffic on the company websites, search page rankings, and details of company products and services shared on Facebook or Instagram, or other social media sites eventually convert to a part of digital marketing ROI.
Understanding return on investment is necessary for business owners, as they like to know if the revenue spent on digital promotion is getting any income. It is a complex procedure as other factors are also involved in calculating ROI.