As a business, we exist to fulfill a need. It is what allows us to stay in business, to grow, and to find new innovations. Sometimes you are the premier provider of the solution, while other times you are one among many. When that happens, marketing exists to help you stand out from the crowd. This could be through traditional advertising like radio and television or one of the newer methods like digital marketing. Be sure to track the digital ROI and traditional marketing return on investment with whatever avenue you choose.
Marketing takes your brand and your service and gives them a chance to be found by those who are looking for the solution you offer, but don’t know that you are the one that can help them. Any advertising you do comes with a cost. It is an investment in your business’s future. How do you know if you are making a good investment though?
A popular phrase attributed to John Wanamaker, a business owner from the late 1800’s and 1900’s, is “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Today we have a lot of attribution models to help people understand where their money is going in their marketing efforts. With so many avenues available to try and grow your business, it is more important than ever to know which ones are working for you and which ones are not.
As a business owner, you want a good return on investment. If you have a machine where you put $1 in and it sends $2 back out, would you ever stop putting that $1 into the machine? That is what marketing should be for you. A machine where you put money in and get even more money from in return. Sometimes, a digital marketing ROI can look a little different depending on your goals for any campaign, but the ultimate goal is to increase your business. With a positive digital ROI you know that your money is working and that you are driving your business to growth.
How can we measure digital marketing ROI?
In digital marketing, you can set up conversions with values to know when an action is taken it generated a certain amount of money for you. For ecommerce, this is easy to understand. A product costs $29 so when someone purchases it you make $29. What about a service based business where you have to quote a client and each job is different? That can still be tracked but it does require a little more math upfront to get to that point. First you would want to figure out how much a lead is worth to you by taking what your average job value is and what ratio you close a lead to give you what a contact is worth to you. Then your digital marketing agency can track the leads that come in to give you a measure of the ROI as well as the number of conversions or contacts you had from forms or even phone calls. Your digital marketer should track how they came to the website and then how much they purchased and provide that information to you.