[This Simple Guide to Marketing ROI is designed for those

trying to understand the basics of calculating marketing ROI. It

teaches you everything from basic formulas to best practices in

simple terms. If you have any further questions, you can get in

touch with us. We’ll be glad to help you out.]

Whether you are planning a new marketing campaign or

testing the efficiency of your current marketing activities,

ROI is the metric constantly used.

At the most basic level, ROI compares the amount of money

you spend on a project to the amount you earn from it.

The ultimate goal of ROI is to earn more money than what you

spend on a marketing campaign. What’s considered as a good

ROI depends on the type of campaign and platform used.

Determining the exact ROI from each campaign is challenging.

When dealing with strategies like PPC, social media ads, email

marketing, you might be able to easily see the ROI.

WHAT IS ROI IN MARKETING?

But if you are dealing with other strategies like content marketing, podcasting, vlogging, it might be difficult to tell if the campaign is directly leading to a purchase. When it comes to calculating marketing ROI, here’s a simple formula from HubSpot: [((number of leads x lead-to-customer rate x average sales price) - cost or ad spend) cost or ad spend] x 100

Number of Leads: How many people converted to lead?

Lead-to-customer Rate: What percentage of leads turn into customers?

Average Sales Price: An average sales price after applying seasonal discounts and offers.

Cost or Ad Spend: The amount you spent on a marketing campaign. Both the cost of running the ad and the associated service charges.

CALCULATING MARKETING ROI’S OF DIFFERENT MARKETING STRATEGIESBlogging:

If blogging comes under your marketing strategy, you should measure time-related costs, production, and promotional costs. To track time-related costs, calculate how much time an employee spends on creating the content and multiply it by hourly rate. If the blog links to a landing page or any other marketing material, use a tracking URL to see how many visitors are coming directly from the blog.

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Through tracking visitors, leads, and sales, you can understand how effective is your blogging strategy. For example, if you spend $900 on creating 5 blogs posts and another $100 for promotion. You attract 10 leads out of which 5 get converted. Let’s say you earn $2000 per client. [((10 x 0.5 x $2,000) - $1,000) ÷ $1,000] x 100 = 900% That is the percentage of ROI you earn. You can now experiment with different content strategies and optimize the returns even further.

While many businesses are reluctant to use email marketing,

B2B still finds it very useful. The ROI here depends on the size

of your mailing list, type of email ad, and audience. So email

marketing is something you can try.

You might want to add a tracking URL to see the traffic it drives

to your site.

For example, a bookstore offers a weekly newsletter to

customers and those who sign up on their website. An author

pays them $100 to promote the book and linking the newsletter

to their product page. $20 is the price of a single book.

EMAIL MARKETING

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With tracking URL, you can see that it drove 50 visitors to the product page, out of which 20 filled the lead form and 17 purchased the book. [((20 x .85 x $20) - $100) ÷ $100] x 100 = 240% After seeing how much money they gained from the newsletter, the author may continue placing the ads.

With PPC ads, you pay for every click the user makes on your

ad. After you launch the ad, you need to closely monitor it to

optimize for ROI.

For Example, an online hardware store spends $1000 on a PPC

campaign. Out of 10 visitors they receive, 3 of them place the

item in the cart, and 1 makes a purchase for a $1000 item.

[((3 x .33 x $1,000) - $1,000) ÷ $1,000] x 100 = -$1

From this ad, the company realizes that paid ad strategy is not

working out for them.

PPC CAMPAIGNS

BEST PRACTICES FOR MEASURING MARKETING ROIWhen it comes to measuring marketing ROI, things can get tricky. While paid ads can provide specific metrics to measure the ROI, it’s challenging to measure ROI for other marketing material.

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Along with ROI, these are the metrics you should keep an eye on. This can give you an accurate measure of the effectiveness of your marketing campaigns.

• Time Spent: How much did your marketing team spend on creating the material?

• Production Cost: The total cost of service and software needed to create the campaigns.

• Promotional Costs: Track the amount you spend on various promotions.

• Analytics: Use a tracking URL to determine if your content is driving the desired traffic.

• Non-Financial Returns: Did you get any new followers, subscribers, or likes due to your campaign? These metrics may not directly translate into ROI but boost your brand awareness.

CONCLUSIONAs your marketing strategy branches out to different platforms, ROI calculation gets challenging. There might be platforms that do not directly contribute to the financial goals but play a supporting role.

The guide explains the basics of calculating your marketing ROI, but as your organization grows, you need a robust plan to rely on.