According to a Fournaise Marketing Group study, the vast majority of marketers struggle to track the financial return of their marketing efforts.
These days, digital marketing is all about providing results. In the past, you may have been able to get away with generating page views or likes. Those days are long gone. Now we need to be able to produce measurable results to both determine and present our digital marketing ROI.
Today’s digital marketing ROI is about painting the complete picture. Sure, exposure, awareness, and social results are important. However, you must also be able to demonstrate and value you create for every marketing dollar spent.
Digital Marketing Campaign ROI
With only 18% of TV marketing campaigns generating a positive ROI, your digital marketing campaign is nearly guaranteed to be an improvement over traditional marketing outlets. Let’s face it, that’s hardly a feat of marketing mastery. I mean, 79% of companies with a blog report positive ROI for inbound marketing. (Hubspot)
What we want is to provide a powerful digital marketing strategy built with ROI at its core. Since the turn of the millennium, spending trends have leaned toward short-term results. In turn, long-term marketing initiatives have dropped off.
As you can imagine, the need for both is still present.
Short-term marketing provides the instant gratification of a financial boost. Long-term marketing provides the longevity necessary for success and growth.
A Facebook Ads campaign may provide the financial spike you need to reach your quarterly profits goal, while your content marketing establishes your brand authority and showcases the expertise that keeps clients heading your way for years to come.
Today we have to ability to measure return on effort and investment in ways never before possible. We can monitor conversions in real time (rather than just impressions). This gives us the ability to determine the influence of minor campaign changes on our financial return as we implement them.
It’s easy to get comfortable with the instant gratification of digital marketing ROI reporting. Don’t let it take the focus off of the long-term results just because they’re more difficult to track.
Long-Term and Short-Term Digital Marketing ROI
“Why do I care about likes, shares, and follows? I’ve just spent a bunch of money on digital marketing and I want to know what I have to show for it.”
Being able to report on short-term results has become progressively more important for marketers. The truth is that there are too many leaning too hard on their social media figures, with the inability to report financial gain (or loss).
In reality there are two things that determine a positive short-term digital marketing ROI: the ability to bring people to your product or service, and the ability to convert these leads when your marketing brings them in.
In other words, your awareness only goes so far. In the short term, if you’re not closing deals or selling products, your digital marketing isn’t succeeding.
Now that that’s been said, maybe I’ve been ragging on marketers not being able to calculate their financial return a little too much. It’s time to about-face and tell you that digital marketing ROI is certainly about more than dollars and cents.
Actually, all ROI is about more than cold hard cash.
In the long term, brand awareness and persuasion through dozens of touchpoints is an increasingly paramount factor to consider in your overall digital marketing ROI. However, brand awareness, perception shifts, and all sales influenced in the long term can be difficult to measure. This fact increases the importance of determining your financial ROI figures and building a system to track them.
That said, even short-term campaigns (special offers with a deadline, etc.) can have an influence on long-term ROI. If you derive one new sale from a special offer, your short-term ROI improves. If this customer then returns several times over the course of a few years, long-term ROI (also known as customer lifetime value or LTV) is also positively stimulated.
Many marketers focus on a single side of digital marketing ROI. It’s important to consider both the short-term and long-term benefits, the immediate financial return, and the long-term effects of positive awareness generation and LTV.
Calculate Marketing Budget
When you’ve determined your company’s cost per lead or cost per conversion, you’ll be able to start building your marketing budget.
Contrary to popular theory,
a marketing budget is not just the amount of money you have available to spend on marketing every month.
Determining a marketing budget means examining the data. (More on that in a minute.)
Set your marketing budget based on your sales and/or profit goals and the number of new buyers you’ll need to reach that goal. To do that you must first determine your customer lifetime value from repeat purchases and average order size, and transaction percentage of one-time purchases.
It may be starting to sound complicated, but we’ve got you covered. In order to calculate your marketing budget, check out our simple marketing budget calculator.
Data-Driven Approach
Every company and marketing decision you make should be determined by data. The marketing world should no longer accept guessing. You have the ability to determine exactly what’s working and what needs improvement. You need to be testing. There is an extraordinary plethora of tactics, platforms, tools, and dashboards at your disposal. Utilize them to your advantage.
Looking for a way to increase your digital marketing ROI? Check out our Business Advantage program. We’ll work with you to prioritize your digital marketing investment across geographies and products, define the right messages for your ideal buyers, and find the best mix of channels to produce the greatest business impact.
To your growth,
Peter
