A recent study by Forrester Research revealed that U.S. marketers wasted as much as $7.4 billion in one year on low-quality digital display ads. Overall, marketers estimate that they waste 20-30% of their advertising budgets. This waste represents a serious threat to an organization’s success, which is why it’s so important for companies (and their marketing consultants) to carefully track and measure the ROI of every campaign.
What is Marketing ROI?
ROI stands for Return On Investment. Simply put, your marketing ROI is the amount of business revenue generated by your advertisements, as compared to the amount of money spent on those advertisements. ROI can be positive (indicating that your campaign is making more money than it costs to run) or negative (indicating that it costs more to run your campaign than you are making from it).
How to Calculate Marketing ROI
The marketing ROI formula itself is relatively straightforward. Collecting the data, however, can be challenging. The following best practices should help you monitor the metrics that matter for your marketing campaigns, allowing you to make adjustments and focus your spending on the efforts that generate real revenue for your business.
#1: Structure Your Campaigns So That You’re Always Testing
When it comes to marketing, there’s always room for improvement. When you start a new campaign, make sure you’re prepared to continue testing and evolving as you go in order to improve your ROI. The easiest way to do so is to map out several options in the areas below:
- Calls-To-Action: What do you want your audience to do? Maybe you want them to provide their email addresses so they can download a white paper or case study. Maybe you want them to sign up for a free trial or make an immediate purchase. Have different options in mind so you can experiment to find out which CTA yields the best results.
- Ad Copy: Sometimes, it can take some testing to find the right message for your audience, and once messaging has been used for awhile, it can become stale. Vary your ad copy to find the most compelling messages and be ready to change your messaging often enough to keep your audience interested.
- Ad Creative: does a bright picture draw more interest? A .gif instead of a still image? You’ll never know until you test.
- Landing Page Design: If you’re sending people to a landing page where they can complete a desired action, you will want to test different versions of your landing page. Consider changing where you place your CTA buttons, including (or removing) a video, and using different images to see which ones perform best.
Before you launch your campaign, think about what you plan to test and when you want to do it. It’s easier to implement changes on a regular schedule versus doing things haphazardly once you have moved on to other projects.
#2: Implement Ad-Level Tracking
Before you launch an on- or offline campaign, think about how you intend to measure your results. Depending on your purchasing process, tracking ROI can be a real challenge. Consider the following scenarios:
- Do people call your business directly? Call tracking services like CallRail can give you unique telephone numbers to use with each of your advertising campaigns so you know which ones are generating revenue.
- Are you mailing postcards or brochures as part of your campaign? Generate individual offer codes for each mailing, or ask customers to present the card in person.
- When all else fails, ask! If there isn’t a clear-cut way to track the results from your ad campaign, you can ask how customers heard about you as part of your on- or offline check-out process.
Online tracking will usually involve monitoring your website traffic using Google Analytics and a combination of trackable goals, UTM codes, and cookies to record where your visitors came from and how they interacted with your website. Some tips to keep in mind:
- A dedicated landing page with its own UTM code can tell you how users found your site and what they did when they arrived.
- Other ad platforms, like Facebook ads, use pixels to track ad performance. These little bits of code are added to your website to track what happens when a user visits from one of your ads.
- Platforms like SalesForce and other CRMs use tags to track how users engage with your website and your offers.
- E-Commerce tracking in Google Analytics can be used to record transactions completed through your website. Using the above tracking codes, you can determine if a purchase was a result of your ad campaign.
#3: Connect Your Tracking to Google Analytics
As mentioned, many of the tracking tools you’re going to use to monitor your marketing ROI will operate through Google Analytics. The platform offers conversion tracking, e-Commerce tracking, and metrics like time on site, number of new users, pages per visit, and other data that can indicate whether or not a campaign is performing well.
In order to take advantage of the tracking you set up earlier, you’ll need to make sure that you have goals or conversions (such as lead submission forms) and e-Commerce tracking set up in Google Analytics. Since you’ll likely be using UTM codes to track your campaigns, you will also want to record those codes so you know how those campaigns will show up on the platform.
Before you launch your campaigns, perform some test actions to make sure Google Analytics is recording interactions using your UTM codes or other tracking mechanisms.
#4: Consistently Track and Revise Your Campaigns
Once you have your tracking place, create a regular cadence for reviewing and reporting on your ROI and other defining metrics for your campaigns. Bi-weekly tracking is recommended for monitoring the most important indicators like new leads or conversions, new customers, and overall ROI. Regular tracking will enable you to notice any serious positive or negative fluctuations and take action to improve your campaigns based on that knowledge. It will also create a long-term picture of your performance, so you have a better idea what to expect from month to month and year to year.
Are you struggling to get a handle on your ROI? Do you need better results? Talk to our marketing consultants about your concerns. We’re here to help!