Do you need to measure your digital marketing ROI? Yes, and here's why

February 22, 2023


Do you need to measure your digital marketing ROI? Yes, and here's why

Return on investment (or ROI) is important for every business. It feels like an obvious statement to make, but it’s true. Without it, you can’t measure success. And when you can’t measure success, business growth can take a hit. 

But when it comes to digital marketing, tracking and monitoring ROI is easier said than done. Why? Because some marketing activities are hard to track. You do the work, but it’s not always easy to see the direct financial impact. 

In this article, we’ll show you how to measure marketing ROI effectively. We’ll also cover why measuring marketing ROI is crucial and the challenges you might face along the way. 

What is ROI in digital marketing? 

Digital marketing ROI is the financial impact (profit and revenue) of your marketing activity. By calculating your ROI, you can figure out how successful your marketing activity is and how to improve it going forward. 

Ideally, you want your ROI to be as high as possible. The higher your ROI, the more profit and revenue you’re making. 

The basic calculation for ROI is:

ROI = (net profit/total cost)*100

When it comes to marketing, this calculation is just one possible formula. There are other ways you can measure ROI, which we’ll talk about in more detail later.

Why is digital marketing ROI important? 

Let’s outline why measuring your digital marketing ROI is crucial for business success. 

1. Effectively allocate your digital marketing budget

Measuring your ROI shows you what’s working, and what’s not working. With this information, you can make informed decisions about where to allocate your marketing budget.

Let’s use paid ad spend as an example.

You start by creating different ads for your business. Over time, you’ll be able to see which of these ads get the most traffic, the most engagement, and the most ROI. 

From here, you know how to effectively allocate your budget going forward. You’ll stop spending money on ads that don’t convert, and put your budget towards ads that’ll boost your ROI. 

2. Identify areas of growth and opportunity 

When you can see how your marketing activity is performing, you can also identify areas of growth and opportunity. 

Take SEO, for example. Let’s say you perform some on-site SEO updates to improve your website. When the changes have been made, you track progress to monitor your ROI. 

The results show that the changes are working. Your rankings are increasing, customers are responding well to your website, and conversions start to increase. The figures speak for themselves, so what’s next? 

Now that you know the SEO changes are working, you can ride the wave and keep making improvements. 

3. Better understand your customers 

Tracking ROI gives you a deeper understanding of your customers. You can figure out what they respond well to, what type of content they want to see, and how to move them through your sales funnel. 

Here are some other things you might learn: 

  • How they want to engage with your website 
  • The types of ads they’re more likely to engage with
  • The type of social media content they want to see 
  • How they move through the customer journey 

With all this information, you can create a unique and tailored experience for your customers. And the better the customer experience, the more likely customers are to spend money.

In fact, a recent study found that 52% of customers would pay more if they knew they’d get a better customer experience. Here’s the breakdown of those stats by industry: 

(Image Source)

How do you calculate ROI in digital marketing? 

Ultimately, the goal of ROI is to make more than whatever you spend on your marketing activity. As mentioned, here’s a typical ROI formula: 

Although this is the most generic formula, it’s not right for every situation. The best way to calculate ROI depends on what you’re trying to track. A "good ROI" varies based on your marketing strategy, your distribution channels, your industry, and so on. 

It also depends on the type of marketing activity you’re tracking. With PPC, for example, your ROI is much easier to track. It’s often done automatically, so all you have to do is access the platform you’re advertising on and voila — you can see the results in black and white. 

But if you’re trying to track the ROI of something less tangible, like content marketing, you might struggle to see if your efforts lead directly to a purchase. 

The Content Marketing Institute says that determining ROI has been a mystery for markers for decades — and for good reason. You can’t always track content marketing conversions in the same way as PPC, so it’s harder to attribute revenue to your content marketing efforts. Tracking URLs help, of course, but it’s still not a fool proof method of tracking and monitoring ROI. 

In situations like this, it helps to think of marketing activity as an investment — or, as Robert Rose says, “a strategic asset that builds value over time.” Instead of measuring incrementally, look at your ROI from a long-term perspective. Over time, you’ll likely see how the impact of your content marketing has increased traffic and conversions.

In other words, take a step back and look at the bigger picture. 

Aside from looking at revenue, you should also consider non-financial elements to determine success. Here are a few examples: 

  • Reach or engagement on social media
  • Increased organic traffic 
  • Improved brand perception
  • Greater brand awareness 
  • Boosted customer loyalty 

These areas might not give you an immediate financial return, but they can indirectly boost sales and customer relationships in the long-run. 

Use a digital marketing agency to make the process easier 

Tracking digital marketing ROI is crucial, but it’s also hard to do. 

So what’s the solution? 

Working with an expert is a good place to start. 

If you’re struggling to figure out how to measure the success of your marketing activity, talk to a digital marketing agency like Ascend. Our team of experts have experience in tracking and monitoring all kinds of digital marketing activity. We’ll work with you to figure out what you want to achieve, and how to track it effectively. 

Find out more about us or get in touch to get started!

Latest News

See what's new at Ascend


Do you need to measure your digital marketing ROI? Yes, and here's why

February 22, 2023

A no-nonsense, beginners guide to SEO | Ascend

January 20, 2023

What is PPC? Learn the basics of pay-per-click advertising

May 18, 2022

How to choose the best digital marketing agency for your business

April 29, 2022

Stay in touch

Reach Out

Feel free to contact us