There’s no doubt that digital marketing can positively influence your business. It can help with brand awareness, which can produce leads and sales. 

But you might be wondering how many sales you can produce with a digital marketing strategy. You might be wondering how to determine your digital marketing ROI and how to improve that ROI. 

This is for any business. A digital marketing ROI will tell you how much you are making based on how much you are spending. You’ll see if you are producing a profit or a negative outcome. 

Even if you are producing a positive ROI, you have to consider how to widen that gap. You have to figure out how to improve that ROI that helps you get more return on your spending. 

Here’s a guide on everything you need to know about digital marketing ROI. It’s important for every business to know so they can determine what their profit is after running a marketing campaign. 

What Is a Digital Marketing ROI? 

Your digital marketing ROI will tell you if you are making a profit. 

One of the ways to calculate your ROI is to take net profit divide it by marketing costs and then multiple it by 100. It’s net profit/marketing costs x 100. 

If you want to understand your total net profit, it requires a different calculation. You have to subtract revenue from costs, divide by marketing costs and then multiply by 100. 

Why should you measure your ROI? 

You need to measure your digital marketing ROI to determine if you are meeting your business goals. You need to determine if you are spending more on your marketing campaigns than you are bringing in revenue. 

Your ROI is important because it can tell you where you are having the most success in your campaigns. 

For example, you might experience a great ROI in email marketing and an awful ROI in Facebook ads. This means you should focus on either improving your Facebook ads or investing more of your marketing fund in emails. 

The more you know about digital marketing ROI, the more you know where to spend your money. You know where you can have the most success and be the most profitable. 

How Do You Improve Your ROI? 

You can improve your digital marketing ROI in a number of ways. 

First, you have to access where it needs improvement. You need to assess your business goals and if any of your marketing campaigns are meeting those goals. 

Here are some specific ways you can improve your ROI. 

Reevaluate Your Goals

As already mentioned, you have to reevaluate your business goals. You have to assess if your marketing campaigns are helping you reach your goals. 

You have to assess if you are producing enough leads, sales, or website traffic. Reassessing your business goals can help you figure out where part of your marketing needs to be adjusted. 

For example, if you have PPC ads that aren’t performing well, you have to consistently change it or reevaluate how effective PPC ads are to something else. You have to consistently make changes that help improve your goals. 

What Does Analytics Say? 

While your ROI can tell you how much you are making, you should also look at the analytics

You should see how many websites visits you are getting, page views, clicks, and other measurable stats that help you figure out what part of your marketing campaigns are effective. 

Analytics should be a part of your decision-making if you are trying to decide where to spend more marketing dollars. It can also help you make necessary changes in a campaign that isn’t producing enough leads or website traffic. 

You should consider something like Google Analytics that can tell you where you are getting most of your website traffic. You can also see what blog post is read the most, and what page produces the most leads and conversions. 

When you monitor the analytics, it helps keep you informed. It gives you a clue of what your ROI will be before you spend thousands of dollars. 

You should use analytics to make quick decisions before you pour in more marketing dollars. 

Reevaluate What You Know About the Consumer

Another part of improving your digital marketing ROI is to reevaluate what you know about the consumer. 

You have to assess what you know about your ideal target market and if your digital marketing ads are effectively reaching them. Your digital marketing ROI is dependent on your ideal target market. 

You have to know their problems, where they live, their interest, and why your product is relevant to them. This will guide your marketing strategy. It can tell you what you need to blog about or create PPC ads on. 

When you reevaluate what you know about your target market, you may discover what areas you need to improve your digital marketing campaign, which can help improve your ROI. 

How Is the Consumer’s Behavior Changing? 

Now that you have an idea of how to improve your digital marketing ROI, you need to consider other factors that may contribute to a higher ROI. 

While you know about reevaluating your target market, you should also consider how their behavior is changing. You should consider what newer generations are doing that you need to do to capture their attention. 

For example, a lot of businesses have learned to create social media campaigns because that’s where most of their target market is hanging out. Businesses are learning to create Facebook ads and post on social media in order to promote brand awareness. 

This is something you have to consider in your business if you want to relevant to the consumer. It’s also why you need to understand how the consumer’s behavior changes and figuring what they are into and doing. 

You need to know the best ways to reach them. 

What Else Should You Know About Digital Marketing ROI? 

There’s a lot more you don’t know about digital marketing ROI. While you may know how to calculate your digital marketing ROI and how to improve it, you still have to consider other factors that can enhance your business. 

Here are some things to consider about your digital marketing ROI that can help you not only improve it but also ask the right questions. 

What Marketing Channels Are Most Useful to Your Business? 

Finding the right marketing channels to produce leads and sales is critical to your business. 

You need to assess whether using marketing channels like Instagram and Facebook is more effective than using Twitter and LinkedIn. You need to figure out which of these is going to produce the most qualified leads for your business. 

You may discover that some of them produce a lot of leads for your business but they aren’t qualified. This means they are useless. 

You need to figure out what marketing channel will give you the best ROI. 

What Kind of Leads Are You Producing? 

As mentioned already, you also need to figure out what kind of leads you are generating. You need to figure out how qualified your leads are and if they are ready to buy. 

For example, if you generate 100 leads but only 1 of them converts, you need to assess if that digital marketing campaign was worth it. If you spend $1000 on the campaign to produce 100 leads, resulting in just one of them making a purchase of $500, then you lost $500. 

In order to improve this, you could continue to warm up the leads you are receiving. That means sending them email campaigns about your business and how you can help them. 

It means staying in communicating with them until they make a purchase. 

But ultimately, you need to assess the quality of leads you are generating and if any of them will be ready to buy. 

What Is Your Conversion Rate? 

Your conversion rate is critical to your digital marketing ROI. If you are close 7 out of 10 leads, your conversion rate is 70 percent. 

But if your business is closing only 2 out of every 10 leads and it’s leading to a business loss, then you have to reconsider what kind of leads you are generating. 

Your conversion rate can help you determine if you are going to meet your financial goal. It can tell you how much you are paying per lead and if you are going to get a return on your investment. 

One of the ways to improve your conversion rate is to make sure the sales and marketing team is aligned. You want to make sure they are communicating about what the consumer is doing and how you can help them. 

Another factor to consider with conversion rate is to make sure you are breaking it down. That means you are seeing what your conversion rate is among different campaigns. 

You want to see if your conversion rate is higher on your website, with specific ads, or if a specific demographic of your audience is closing higher than others. 

It can ultimately tell you if you need to make changes in your marketing campaigns or if you need a website design

What Is the Customer Lifetime Value? 

The final metric to consider when it comes to determining your digital marketing ROI is the customer lifetime value. 

This is calculating how much your business will profit during the lifetime of a customer.

For example, you may think that a customer who makes a $25 purchase isn’t worth much, but if they make multiple $25 purchases in the course of a year, then they are much more valuable. 

This is why it’s important to retain your consumers rather than trying to always find new consumers. Your existing consumers already know everything about your business. 

You should consider marketing strategies that help you retain customers rather than always bringing in new customers. This can also help your marketing ROI. 

Consider New Marketing Strategies 

Now that you know everything about digital marketing ROI, you should consider the best ways on how to improve it. 

You should figure out how to reach your target market. This can help improve your ROI and optimize the best channels. 

One of the marketing strategies that can help with warm-up leads and retain customers is email marketing. This offers a way to stay in constant communication with your leads. You can send stories about your business and how you help consumers. 

Email marketing is also a great way to send promotions and sales. It can entice consumers to buy without being overly intrusive. 

Blogging is a cost-effective way to also improve your digital marketing ROI. You can write content on your website and make the content SEO optimized so it ranks higher on Google. 

Blog articles can provide in-depth insight into your business and your product. You can talk about the many ways your business helps your consumer. 

Now You Know Everything About Digital Marketing ROI

When it comes to learning about your digital marketing ROI, it can provide a lot of insight into your business and how you serve your consumers. It can give you an idea of what you need to do to improve your ROI. 

When you figure out how to determine your digital marketing ROI and everything that goes into it, you have a better idea of how to fix it. You know what strategies to use that can help give you a greater net profit. 

If you want help with your digital marketing strategy, you can contact us here.

How To Determine Digital Marketing ROI
Ken Marshall

Ken Marshall is the CGO and a Partner at RevenueZen. He’s been doing some version of digital marketing for the past seven years and has shifted his focus to all things SEO and inbound for the last five. Husband, mini Australian shepherd puppy dad, and serial entrepreneur (mostly failures, lots of lessons).