fbpx

How To Calculate ROI In Digital Marketing: The Simple Figures You Should Focus On

How to calculate ROI in Digital Marketing

You will agree that every business owner hopes to increase sales and website traffic quickly and easily and there are multiple ways to do this. One Of Such ways is Display Advertising.

In This Post, we are going to show you the Simple Formula On How To Calculate ROI In Digital Marketing, and our focus will be on Display advertising. 

Let’s Dive In.

QUICK OUTLINE:

-What is Display Advertising?
-Measuring ROI for Search
-Measuring ROI on Social Media
-Conclusion

Display advertising is one very effective digital marketing strategy for your business. It helps in sales conversion very quickly and is becoming extremely popular these days.

Display ads are majorly retargeted ads. Retargeted ads led to a 1046% increase in branded search and a 726% lift in site visitation after four weeks of retargeted ad exposure. This stresses the importance of display advertising which aims at retargeting the audiences.

However, what assures effectiveness in not just display advertising and other marketing strategies, but your ability to measure results.

Measuring return on investment (ROI) tells you if you are getting the expected value for your money or not. This helps in improving or redeveloping your strategies.





DISPLAY AD

Display ad is a visual or graphical form of advertising which appears on an app, website, or social media. It can also be called a banner ad.

Display advertisement is paid for and can either come in the form of text, video, or images flashing through your screen. It is mainly aimed at getting new visitors and improving traffic quickly by retargeting the audience.

For example, a user checks through your site and exits. The moment they open another site, the advert from the previous site pops up. It is done after the pattern of the user is monitored. This is how the system knows the right ad to display.

Display advertising uses visitors browsing behavior to retarget their audience. It can also use keyword targeting. This means studying if the user’s search keywords relating to the product you sell or service you render.

You hardly get it wrong with display advertising because of the data involved. It ensures that the ad campaign is shown to people who have an interest in it and this can easily lead to patronage.

Display advertising is a form of pay per click (PPC) ad in which the advertiser pays anytime a user clicks on the campaign.

As effective as it may be, every advertiser ought to measure the ad performance. This helps to set certain things in perspective. For example;

  • You get to know how appealing your campaign is- If the click-through rate (CTR) is high, you would know that you are doing something right.
  • Knowing how to re-strategize in the unfortunate even that users queries or reports your ad as inappropriate.
  • It also helps you know how many sales conversions you made from the ad.
  • Helps you determine how your money is being spent and if your profit matches or surpasses your expenditure. If it doesnโ€™t, it means your ad campaign strategy isnโ€™t working and you are running at a loss.
  • Measuring ROI helps you to determine how much value you have been able to give to your audience.

 

 

what is roi in marketing
(Display Advertising)

How To Calculate ROI In Digital Marketing

Your return on investment is the total of all resources spent from the start to finish of your campaign. It includes the amount of money, time, and other resources. Nevertheless, the emphasis would be on calculating the financial resources invested in your ad campaign.

In calculating your ROI, you can use either software or do it manually. Tracking ROI is a consistent practice for as long as your display ad campaign is still running. It is a great decision to calculate your ROI especially if you are running multiple campaigns or digital marketing strategies. It helps you know which one is doing better and which to improve or do away with.

To calculate your ROI manually, you should divide your gains from the campaign with the total amount spent on the campaign.
(Sales growth – Cost of Ad) / Cost of Ad Campaign=ROI.

For example, if you run a display ad for $300 and after the ad, your sales growth for that period was $2,000. Your ROI would be $2,000-$300= $1,700.

You can also use this formula to calculate any other business ROI.

If you do not want the hassle of calculating your ROI manually, there are ways to calculate it with some tools.

Some of the tools you can use are;
Google analytics: This is an extremely powerful tool you can use to measure ROI. It is a Google created service which primarily tracks and reports website traffic.
Asides from tracking ROI, it also gives you reliable insights capable of helping you understand your audience better. This helps you know when and how to improve your campaigns.

Google Analytics can show marketers the impact of nearly all their campaign marketing actions. If you run multiple ad campaigns, Google analytics helps you determine which is performing better than the other.

2. CRM software
Customer relationship management software (CRM software) is a tool used to organize and access customersโ€™ data.
It stores all-important customer data and gives you access when you require it. It helps you keep track of customer interaction and this is good for display advertising. You can easily gather and collate information regarding sales conversion and CTR.

There are different CRM softwareโ€™s which are perfect for all business types and sizes. Some of them are;

HubSpot, Zoho, Pipedrive, and Insightly.

 

 

Measuring ROI on
Social Media

How To Calculate ROI In Digital Marketing: A Look At The Social Media.

When you use display advertising on social media platforms like Facebook, Instagram, and Twitter, there are other ways you can measure ROI.

This is because display ads here can be for awareness Creation. Asides from calculating, you can use your social media platform performance to evaluate the effectiveness of your ad campaigns
Social media insights are one good way to measure ROI. A lot of social mediums can display the insights of a page. It does this by collecting certain data or account activity.
These data include profile visits, average likes, reach, comments, average new followers, and others.

Following up on this information helps you determine how much effect the campaign had or has on your target audience.

Finally, as effective as display advertisements are in digital marketing strategy, measuring ROI is what helps you measure success. It also helps you to realize what you are doing right and the areas you should work on.

This increases your success in sales conversation and awareness creation.

On this post, we tried to show you the practical ways on how to calculate ROI in digital marketing. 

It is now up to you. Have you started to take ROI seriously in your digital marketing campaign or you will need the assistance of a digital marketing organization to do that?

Whichever is your answer, please feel free to let us know in the comment section below.

Write a comment