How To Measure and Increase Digital Marketing ROI

Before we dig into the good stuff, let’s start with the key statistics:

So, what exactly is ROI?

ROI is a performance metric used to evaluate the success of an investment. Simply put, it measures whether what you get out is worth what you put in. Think of it like a flower bed. You plant seeds, you expect some flowers, right? Your ROI is the number of flowers you get, compared to the number of seeds you planted.

When running a business, most of us can’t afford to fly by the seat of our pants. Having a good grasp on whether an investment is going to pay off is key to making big financial decisions with confidence.

Knowing these numbers adds gravitas to your ideas and proposals so that others can get behind them too. Marketers who regularly calculate their ROI are 1.6 times more likely to secure budget increases for their marketing activities.

Not only that, but without them it’s impossible to measure the success of your campaigns in any concrete terms. Your conclusions will be based mostly on guesswork and will be pretty inaccurate at best and completely wrong at worst. You wouldn’t drive a car with your eyes shut, would you? The same principle applies to knowing the ROI of your marketing campaigns.

Calculating ROI it is pretty simple. Let’s break it down:

• Step 1: Subtract your marketing spend from current revenue to find your net return.

So, for example, if you invest $2 and make $10 overall, your net return is $8.

• Step 2: Divide your net return by marketing spend.

Divide your $8 by what you initially invested, which was $2. This gives you a total of 4.

• Step 3: Multiply by 100 and you have your ROI.

Multiply by 100 and you get 400. This means your ROI is 400%. Simple!

What is a Good Digital Marketing ROI?

Typically, an ROI of 5:1 is considered pretty good in digital marketing. This means that for every $1 you spend, you get $5 back. Marketers who want to be truly exceptional though, aim for a 10:1 ratio. In this way, not only does it act as a mark of how well your investment has paid off, but it reflects on you as a marketer too.

Despite this benchmark, each marketing channel has a different ROI ratio. Take a look at some of the best ones below:

It’s all well and good knowing what digital marketing strategies are available to you, but you also need to know how to implement them in a positive way, too.

Below, we’ll go over some top tips to help you make the most of whatever digital marketing methods you choose to use.

Create a Digital Marketing Strategy

It might sound obvious, but making sure you have a solid plan and clear goals when it comes to digital marketing is key to your overall success. This is where a digital marketing strategy comes in handy.

A digital marketing strategy identifies a goal, often in response to a challenge, and then details a set of actionable steps that can help to reach your eventual aim and solve your initial problem.

Although creating a digital marketing strategy isn’t always easy or straightforward, there are a few steps that you can follow to make sure that your strategy covers all of the key bases.

1. Identify your audience — each marketing campaign should have a target audience and knowing them inside out is key to unlocking which marketing tactics will be most effective. You can do this by creating brand personas, which are fictional individuals that epitomize the section of the market you’re trying to appeal to.
2. Solidify your goals — what are you trying to achieve? What is your end goal? Knowing this will help you to define the steps you’ll need to get there.
3. Identify your marketing channels — as you’ve seen, there are a few options out there. Evaluate your budget and the goal you’re trying to reach in order to decide which is your best option. Sometimes, you might want to use more than one to get to where you’re going.
4. Optimize existing content — what’s the point of investing in email marketing or PPC if the website you’re sending leads to isn’t up to scratch or SEO-optimized? Make sure the content you already have is the best it can be to help cinch that conversion.
5. Plan new digital marketing campaigns and deploy — this is like creating a mini digital marketing strategy inside of a larger one. Plan all of your new campaigns, taking into account your budget and what you can expect to spend. Once you’re ready, let loose!
6. Monitor — use ROI and other engagement metrics to evaluate the success of your campaigns. Make sure to track your overall progress against your initial goal.

Use Email Marketing Best Practices

Although email marketing has one of the best digital marketing ROIs out there, success is by no means guaranteed. It takes a practiced hand to get the most out of this marketing stalwart. The good news though, is that getting to grips with email marketing best practices is pretty simple!

Before we get into how to make your emails perform well, let’s address the most important thing: how are you going to send them? 

Unfortunately, using a personal email account won’t cut it, and it’ll make it hard to manage in the long run. We recommend using an email marketing platform like GetResponse or Mailchimp instead.

Although there are some free options out there, most of the best platforms will come with a monthly charge. Given how much money you can make from this marketing channel though, we think it’s worth the investment!

Your next job is to build a list of engaged subscribers that you can monetize. Some people might suggest buying email addresses to build a database quickly, but if you want engagement, this is the worst thing you can do.

It’s much better to build your list slowly using a signup form on your website. This way, your subscribers have consented to receive your emails and will be more engaged in the long run. If you want to speed things up, why not offer an incentive such as a special discount or a freebie to entice more users into joining your database?

When it comes to getting your users to interact with your sends, make sure that you’ve got a strong subject line to hook them in. Don’t get too carried away with your email copy either — short and snappy is always the best way to go. Especially given that you’ll only have your readers’ attention for around eight seconds at best!

Optimize Your Onsite SEO

If you’re hoping to build a strong SEO strategy to drive traffic and conversions, your first step should be to optimize your onsite SEO as thoroughly as possible. When we talk about “onsite SEO”, we just mean making changes to areas of your website that can help you to rank higher in the search engines

One of the most basic examples of onsite SEO is the use of keywords. Keywords are the terms that users search for. Google likes to see them in your content so it knows how relevant your website is to a user’s query.

You don’t want to stuff your copy full of keywords — this can make it feel awkward and unnatural — but it’s good to try and weave them in where it makes sense. Google wants to see that your content is readable, authoritative, and unique!

Other areas for optimization include how mobile-friendly your website is, how many links you have on your page and where they go, as well as whether you have a strong URL structure.

We’d also recommend adding schema markup to your website’s HTML, too. This helps search engine crawlers read your pages, as well as improve the way your website appears on the search results page. However, don’t be expecting to see results overnight. On average, it can take up to 6-12 months to see any significant change in positive ROI.

Unfortunately, SEO requires constant attention and optimization because of regular algorithm updates that impact what exactly makes a web page rank higher than another. We recommend doing regular research into these updates and policy changes, like Google’s Core Web Vitals.

The good news is that, despite the need for consistent revision, once your basic SEO strategies are in place, they aren’t dependent on your budget. This means that you’ll be able to secure a stream of new leads, regardless of what’s left in your pot of marketing spend.

Understand Your Paid Advertising Audience

When it comes to social media advertising, you’re spoilt for choice. There are a number of platforms to choose between, each with its own unique way of doing things. This means that they all appeal to different kinds of users, too.

For example, take a look at Instagram and LinkedIn. Instagram is known for its photo-sharing and visual capabilities, whereas LinkedIn is a networking platform meant to connect professionals across the globe. Although you might find the same people on both, the chances are that they won’t be sharing their poolside holiday pictures on LinkedIn.

The bottom line is that it’s really important to pay attention to the tone and purpose of each platform. This will help you to know which campaigns are best suited to which social media site and the type of user to be found there.

We mentioned them earlier, but when you want to get inside the heads of your target audience, user personas really come in handy. Although they might be mostly fictional, these characters are based on the people you want to target.

They’ll help you to understand what your ideal customer wants, and where their pain points might lie. This kind of knowledge and data will give you unique insights that will only make your paid campaigns more successful in the long run.

Of course, knowing what digital marketing ROI actually means is only half the battle. The other big challenge is choosing which strategies are worth your time, and which provide the best overall ROI.

We asked 65 business owners from a variety of industries which digital marketing channels they considered to be the most effective, and these were the results:

Below we’ll explore these four digital marketing channels. We’ll explain what each one is, and then dive deeper into what their ROIs say about their marketing potential.

#1. Email Marketing

The first email might have been sent in 1971, but email marketing is far from dead. In fact, this renowned marketing channel is alive and kicking, its chameleon-like nature allowing it to change and adapt to the times.

Because of this, it’s one of the most profitable and effective digital marketing channels out there. Not only is it 40% better at converting in comparison to platforms like Facebook and Twitter, but for every $1 invested, businesses see an average of $36 dollars in return. That’s an almost unbelievable 3,600% ROI.

And it’s not just your bank balance that will benefit — email marketing doesn’t require a large initial time investment either.

That’s pretty impressive when you consider the simplicity of this digital marketing strategy. However, successful email marketing isn’t just about sending emails. Yes, it’s easy to get started, but it takes a shrewd marketer to employ this strategy to its best effect.

Aside from building up a substantial subscriber list, challenges include working out when and how often to send your emails, as well as keeping your content fresh and dynamic.

Not only this, but email marketing isn’t just beholden to ROI. There are a host of other metrics such as open rate (OR), click-through rate (CTR), bounce rate (BR), and unsubscribe rate to account for the success — or lack thereof — of your campaigns.

However, these things can be learned, not least by trying out other marketers’ ideas. One huge benefit of email marketing is the ability to A/B test different types of content against each other to see which one your audience engages with more.

Plus, it’s always a good idea to keep up with new email trends. One of these, for example, is the idea of including live content in your emails. By live content, we mean videos, images, or animation. According to research carried out by Litmus, this could increase your ROI by up to 107%.

Brands that use live content regularly report an ROI of 56:1. Remember we said that an ROI ratio of 10:1 was considered exceptional? Well, not only does this demonstrate the importance of keeping your content current, but it single-handedly shows the power of email marketing done right.

#2. SEO

Search Engine Optimization (SEO) is a staple of online success. It involves optimizing your website’s content to appeal to search engines like Google. Your efforts in this area will then determine where you appear on the search engine results page.

And it doesn’t take a genius to know that the higher you rank, the more traffic you’ll get and the better your conversions will be. On average, 53% of traffic for your business will be driven by organic searching. It may seem a bit of a basic thing to cover, but sometimes the simplest solutions are often the best.

SEO plays a large part in the success of your content marketing. Getting it right is pretty important, given that content marketing is 62% less expensive than outbound marketing efforts, like email blasts, but still manages to provide three times as many leads!

If you’re still not convinced that SEO should be an integral part of your digital marketing strategy, let’s get to the raw numbers. SEO marketing has an average ROI ratio of 22:1. That equates to a stunning 2,200%!

Of course, there are some challenges when it comes to SEO marketing, not least of which is that Google regularly runs algorithm updates that reshuffle the deck and reset the criteria for what makes a good piece of content.

However, you shouldn’t let this discourage you. Millions of brands use SEO to boost their businesses every day, taking such changes in their stride and adapting to them.

And there are many different types of SEO, too! Technical SEO, such as optimizing your site for mobile, has an ROI of 117% and sees bigger returns than plain ol’ Standard Content Marketing with just a 16% ROI. Thought Leadership Marketing, which focuses on audience personas, is the most successful however with an average 748% ROI.

The best thing about SEO as a digital marketing strategy is that it’s accessible to everyone. Meta descriptions and schema markup might sound like a foreign language now, but most SEO best practices are common sense, such as making sure you use plenty of long-tail keywords in your copy and optimizing your website for mobile.

#3. Pay-Per-Click Marketing

Although pay-per-click (PPC) marketing is another strategy that uses search engines to find traffic, it’s different from SEO. Whereas SEO collects leads organically, PPC is a digital marketing strategy that allows marketers to pay for their leads instead.

The way this works is simple. Have you ever seen those listings at the top of a search engine results page that have the little “Ad” sign next to them? This is PPC in action.

Marketers decide how much they’re willing to pay for each click, and are then entered into a “bid.” If they’re willing to pay more than their competitors, they’ll be awarded one of the top ad slots on the results page. Then, each time someone clicks on that ad, they pay the fee they promised.

This might seem a little counterintuitive, and you might be asking yourself how you’re ever supposed to make money if all you’re doing is paying someone else, but PPC can be a very lucrative way of generating traffic.

This is because, more often than not, the amount you pay to the platform is negligible compared to what you get back if a lead converts. Generally, companies earn an average of $2 for every $1 they spend on Google Ads.

Like all digital marketing strategies, PPC does have its own unique challenges. For example, it comes with a steeper learning curve than other methods, plus balancing ad spend against your potential return can get tricky, especially when bids get too high and not all your clicks convert.

In addition, running PPC campaigns is a fine art, so you want someone who knows what they’re doing running yours, meaning even more investment into this strategy. But that’s not to say it’s not worth that extra bit of financial commitment — especially when there are potentially big gains to be made!

PPC works across a number of different platforms, but Google Ads is the biggest and most popular. It can also be used on social media platforms and other search engines too.

#4. Paid Social Media Marketing

Social media has taken over nearly every other area of our lives, so why not digital marketing too? This strategy involves displaying ads on social media platforms to target a specific audience.

If you think this sounds suspiciously similar to PPC, you’d be correct. In fact, PPC is just one of the types of marketing methods you can carry out on social media. Others include influencer marketing and display ads. They’re all easily recognizable by the “Ad” tag you’ll usually find hovering in the corner, or at the end of a caption.

Social media marketing is pretty versatile, offering a number of different avenues for marketers to pursue. There’s a lot of profit to be made as well. For example, 89% of marketers claim that the ROI generated from influencer marketing is comparable, if not higher, than that for other platforms.

In fact, social media recently stole the advertising crown from paid search, boasting year-on-year growth of 25% and exceeding $137 billion compared to the $135 billion made by search.

Another strength of social media marketing is that there’s such a diverse range of platforms to choose from. This allows marketers to target very specific audiences with tailored content. Out of the biggest platforms, Facebook is the social media channel that delivers the highest ROI, although Instagram isn’t that far behind.

This kind of marketing works well as a larger content marketing strategy, but it also does important work promoting new products and building relationships with customers. However, thanks to the saturated nature of the social media landscape, it can be tricky to find a substantial foothold.

Additionally, this kind of strategy will only last as long as the extent of your credit card limit. This isn’t a barrier you’ll find with organic marketing strategies like SEO, so before you get in too deep, make sure you have the funds to maintain a campaign to its full potential.

There are plenty of channels out there that you can use as part of your content marketing strategy, but it’s easy to see why these four might be the most popular. If you still need convincing, take a look below at the average ROI percentage for each.

Each channel has its positives and negatives. You don’t need to exclusively use just one, but it’s worth bearing these figures in mind when deciding where to direct your attention and resources.

There’s no getting around it: digital marketing is a vast beast, with many different arms for marketers to explore and exploit. Some are best used alone, whereas others can be combined for a multi-limb approach, and they all come with their own pros and cons.

However, there’s one thing for sure, and that’s the fact that some digital marketing channels offer a higher ROI than others.

Overall, email marketing and SEO have the best ROI, but that doesn’t mean you should dismiss paid marketing opportunities — there’s still profit to be made there with the right strategy and financial backing!

Ultimately, the best way to decide which channel to use is to consider your overall marketing goals and the budget at your disposal. And remember, not every marketing channel is made for all businesses — be brave with your strategies but don’t be scared to change tack and try another tactic if something isn’t working.

After all, Rome wasn’t built in a day, and neither was a successful and profitable digital marketing campaign!