Digital Marketing ROI: what is and how to calculate it

One of the biggest difficulties that marketing professionals always faced is questioning about the results that the sector can generate for the company as a whole. That is, what is obtained as a return after certain investments? 

With Digital Marketing, however, this situation changed as it became possible to evaluate the gains of each action. How is this done? Through the Digital Marketing ROI.

In such a competitive world, you need to know which strategies work and which need improvements.

Without monitoring the effectiveness of your actions, how can you know if you need to improve or modify a specific approach? The good news is that all this can be solved with Digital Marketing ROI. 

How about going a little deeper into this subject, knowing how to calculate this indicator and how to improve it? Next, we’ll address the following topics:

Continue reading this article and get all your questions answered!

 

What is Digital Marketing ROI

Digital Marketing ROI (Return On Investment) is an indicator that shows if your marketing actions investments are getting positive results from the resources that were invested.

The formula to calculate the ROI is:

ROI formula

Its analysis will show if your marketing actions to attract more consumers are working or not. That is, if the investment was efficient or not.

If this indicator shows a negative number, it means that expenses are higher than the returns generated by a specific strategy and that the company is having a loss with that action.

When the opposite happens, it shows that it was useful and caused the expected impact, resulting in higher numbers than what was initially invested.

With those numbers in hand, you can determine whether your company’s marketing plan is working or not, allowing all decisions made to be based on numbers and statistics, excluding forecasts without any practical reference.

Digital Marketing ROI is, therefore, an essential indicator for any company to succeed.

 

What is the importance to calculate this indicator

But why is that indicator so important after all? It’s simple: how to improve something that cannot be evaluated? How do you know if your Content Marketing strategy is impacting your target audience and generating qualified leads for your Sales team? ROI analysis is, therefore, critical to making your decisions accurate.

With metrics like ROI, you can adapt your strategy get to know your results. By calculating this indicator, you can easily be aware of what are the possibilities that offer the best chances of success.

One of the main advantages of Digital Marketing is precisely the possibility to invest in several fronts and ensure you’re impacting your potential buyers through different channels and messages.. 

By not calculating the ROI of your actions, you can end up missing important information about the effectiveness of your actions.

Within your marketing set of actions, for example, one may work well and another may not be as effective, taking down the whole strategy. 

In this way, your company’s resources are used more effectively, based on real and practical facts about the performance of your communication campaigns. 

Just as you don’t waste much time and money on those ineffective actions, you don’t have to throw away the strategies that are working.

With so much competition in the marketplace and increasingly demanding consumers, companies can’t afford to lose resources in marketing. 

It’s critical to be accurate in all your actions and to do so, it’s vital to monitor your company’s Digital Marketing ROI closely and regularly evaluate what is generating positive returns and what needs to be improved.

 

How can you calculate your Digital Marketing ROI

As much as it is a key indicator for the success of your strategies, Digital Marketing ROI is not so complicated to calculate. You just have to take into consideration what the objectives of your company are when investing in communication actions. 

Do you need to generate more leads or strengthen your brand’s digital presence? That’s why we’ve separated some tips for you!

Find out what your Conversion Rate is

If the goal of your Digital Marketing strategy is to increase conversions, you need to evaluate the Conversion Rate.

After all, there’s no point in your blog generating numerous visits if it doesn’t generate any business opportunities, right? This would mean your ROI is low, and your actions are not very effective.

Discover your Cost per Lead

For those who want to increase the number of leads generated for their Sales team, the Cost per Lead is a metric that needs to be closely monitored.

After all, from this number, it’s possible to know how much is being invested in lead generation. 

Calculate your Cost per Acquisition

If leads are no longer your initial focus and the goal is to increase your customer base, Cost per Acquisition will help you understand your ROI.

To know your CPA, all you need to do is use this formula:

  • divide the cost of what was invested in Marketing by the number of new customers that were generated.

With this result, you’ll know if the cost to attract new customers is higher or lower than the result it delivers. 

 

Which tips can be useful to improve your ROI

According to a survey conducted by HubSpot, one of the main challenges among marketing professionals is precisely to prove the ROI of their actions and strategies. 

So that you are not part of the group that put this concept as an obstacle, we separated some tips for you to increase the Digital Marketing ROI of your company. Check it out!

1. Define your goals

As in any marketing or sales strategy, the first step before putting a plan into action is to set a goal.

Does your company need to strengthen brand awareness? Or does it need to generate more qualified leads?

No matter what your goals are, it would help if you defined exactly what you’re looking for with your actions to know what to evaluate.

2. Use the most suitable metrics 

After all, what’s the point of calculating your Cost per Lead if in reality your company’s primary goal is to increase the number of customers? 

Therefore, you must choose the metrics that are consistent with the objectives of your Digital Marketing campaigns and, most importantly, that are useful to you. 

3. Don’t act on just one front 

Unlike traditional marketing, the main advantage of Digital Marketing is the plurality of options and possibilities to impact the public. Therefore, do not direct all its focus and resources towards one or two actions.

Do tests, use different communication channels, change the voice tone of your efforts, and finally, do not limit your strategies. You will see an increase in the chances of getting it right.

4. Identify opportunities for improvement 

It’s not enough to identify a bad result. You have to turn it into an opportunity. Always look for ways to improve what’s being delivered to the consumer. Even when the results are positive, your focus should always be on improving what you’re delivering. 

5. Don’t stop monitoring your actions

The most important thing to improve your Digital Marketing ROI is to monitor it regularly.

If before it was not possible to know exactly what the results of a specific strategy were, today all this is easy to do and even more accurate. So be sure to evaluate all your actions and strategies to continually improve them

Digital Marketing ROI is, therefore, an ally for any professional who wants to stand out in such a competitive market and even manage to prove the value of their actions and strategies to get more resources for the sector.

As you can see, the Digital Marketing ROI shows to a business whether a strategy is working or not. To plan your next actions, you can always be inspired by other campaigns that excelled! Check our content with 6 Digital Marketing examples for your business.

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