Digital marketing is an essential part of any business’s marketing strategy. It’s also one of the most difficult to measure regarding return on investment (ROI). To make digital marketing ROI a priority, businesses need to understand which digital marketing strategies generate the best ROI. You can measure how much you will get back for every dollar you spend on a digital marketing strategy. It is a useful way to compare the costs and benefits of different digital marketing strategies to find out which ones are worth investing in.
Not all digital marketing strategies are equal. Some digital marketing strategies, such as SEO, tend to have a longer-term ROI, while others, such as social media marketing, have a more immediate ROI.
Digital Marketing Strategies And Their Respective ROI
According to campaign monitor, the basic formula for calculating ROI = Net income / Cost of investment x 100. You can calculate how much you’ve spent on your marketing strategy including the amount spent on service providers, ads, team bandwidth, etc.
On the other hand, you can get the net income by subtracting all the expenses incurred from the total amount you’ve generated
Search Engine Optimization (SEO)
SEO involves optimizing your website and content to rank higher in search engine results pages (SERPs) for relevant keywords. The ROI of SEO can be significant, as it can drive highly targeted traffic to your website and increase conversions. Studies have shown that businesses that invest in SEO can see an ROI of up to 1000%.
ROI = ((Profit – Investment) / Investment) X 100
For example, Suppose you invested $10,000 in an SEO campaign over the course of a year. During that time, you generated $50,000 in additional revenue directly attributed to the SEO efforts. The net profit from SEO would then be $50,000 – $10,000 = $40,000.
ROI = ($40,000 / $10,000) X 100 = 400%
Meaning, every dollar invested in the SEO campaign, $4 was returned as profit.
Content Marketing
This involves developing a content strategy that aligns with your target audience’s interests and needs. This is while producing high-quality, valuable content in various formats (blog posts, videos, infographics, etc.). The content has to be distributed across multiple channels to reach a wider audience.
ROI = revenue generated/(production Content Marketing costs + distribution Content Marketing cost).
Here’s an example to illustrate:
Let’s say your content marketing efforts, including the creation and promotion of blog posts, videos, and other content, resulted in $60,000 in additional revenue over the course of a year.
The total cost associated with your content marketing strategy, including salaries of content creators, tools, and promotion costs, amounts to $15,000
ROI = $60,000 / $15,000 X 100 = 400%
This means that for every dollar invested in content marketing, $4 was returned as profit.
Social Media Marketing
Identify the social media platforms where your audience is most active. Develop a consistent posting schedule and engage with your audience. Then, use paid advertising on social media to target specific demographics.
ROI = (Earnings – Costs) x 100 / Costs
Here’s an example to illustrate:
Suppose your social media marketing campaign resulted in $80,000 in additional revenue over the course of a year. This revenue can be directly attributed to your social media efforts.
The total cost associated with your social media marketing strategy, including advertising spend, social media management tools, and any other related expenses, is $20,000.
ROI = ($80,000 / $20,000) X 100 = 400%
Meaning, every dollar invested in social media marketing, $4 was returned as profit.
Email Marketing
You have to build and nurture an email subscriber list. It is important to segment your email list based on customer behavior and preferences. Moreover, personalizing email campaigns and using automation enables you to send targeted messages.
ROI = gained – spent/spent x100
Here’s an example to illustrate:
Let’s say you pay $1000/month for your ESP. In a year, that comes up to $12,000. You also have a marketer directly working on email campaigns for 2 hours, 5 days a week, and at a rate of $10/hour. That amounts to $4,800 a year.
Your email marketing spend in a year is $4,800 + $12,000 = $16,800.
If the cost of your lead is $100 and your email campaign brings 500 leads/year, your total revenue from email becomes $50,000.
(($50,000-$16,800)/$16,800) X 100 = 197.6%
This means that for every dollar invested in email marketing, $1.9 was returned as profit.
Pay-Per-Click (PPC) Advertising
This involves creating targeted ads using platforms like Google Ads or Bing Ads. It requires the use of keywords relevant to your business to attract a specific audience. It is also important to continuously optimize your PPC campaigns based on performance data.
ROI = ((Revenue or Income)-Cost)/(Cost) X 100
Here’s an example to illustrate:
Suppose your PPC advertising efforts resulted in $30,000 in additional revenue over the course of a campaign or a year. This revenue is directly attributed to your PPC campaigns.
The total cost associated with your PPC advertising strategy, including the cost of ads, management fees, and any other related expenses, is $10,000.
($30,000 / $10,000) X100 = 300%
This shows that for every dollar invested in PPC advertising, $3 was returned as profit.
Influencer Marketing
Influencer marketing involves identifying influencers in your industry who can reach your target audience. Collaborating with influencers to promote your products or services. As you take this path, ensure that the influencers’ values align with your brand.
ROI = (Revenue/Cost) x 100.
Let’s consider an example:
Suppose your influencer marketing efforts resulted in $50,000 in additional revenue over the course of a campaign or a specific period. This revenue is directly attributed to the influencer marketing campaigns.
The total cost associated with your influencer marketing strategy, including payments to influencers, any gifted products or services, and campaign management costs, is $10,000.
ROI = ($50,000/$10,000) X 100 = 500%
This means that for every dollar invested in email marketing, $5 was returned as profit.
Video Marketing
This is when you leverage the power of video content on platforms like YouTube and social media. It involves creating engaging and informative videos that showcase your products or expertise. It is also using live video for real-time engagement with your audience to promote authenticity.
ROI = (Revenue/Cost) x 100.
Let’s consider an example:
Suppose your video marketing efforts resulted in $60,000 in additional revenue over the course of a campaign or a specific period. This revenue is directly attributed to the video marketing campaigns.
The total cost associated with your video marketing strategy, including video production costs, advertising expenses, and any other related costs, is $20,000.
ROI = ($60,000/$20,000) X 100 = 300%
This means that for every dollar invested in video marketing, $3 was returned as profit.
Conversion Rate Optimization (CRO)
CRO involves continuously testing and optimizing your website’s design and user experience. You can use A/B testing to experiment with different elements and layouts. Focus on improving key conversion points in the customer journey.
ROI = (Revenue/Cost) x 100.
Let’s consider an example:
Suppose your conversion rate optimization efforts resulted in a 20% increase in conversion rates over a specific period. As a result, you experienced an additional $50,000 in revenue directly attributable to the improved conversions.
The total cost associated with your conversion rate optimization strategy, including tools, A/B testing software, and any other related expenses, is $10,000.
ROI = ($50,000/$10,000)X100=500%
This means that for every dollar invested in email marketing, $5 was returned as profit.
Mobile Optimization
This is when you ensure that your website and digital assets are optimized for mobile devices. You need to implement responsive design to provide a seamless experience across devices. Also, consider mobile-specific advertising strategies.
ROI = (Revenue/Cost) x 100.
Here’s an example to illustrate:
Suppose your mobile optimization efforts resulted in a 25% increase in mobile conversions over a specific period. As a result, you experienced an additional $40,000 in revenue directly attributable to the improved mobile user experience.
The total cost associated with your mobile optimization strategy, including responsive design implementation, mobile app development, and any other related expenses, is $15,000.
ROI = ($40,000/$15,000) X 100 = 266.67%
This means that for every dollar invested in email marketing, $2.6 was returned as profit.
Data Analytics and Measurement
This involves using analytics tools to track the performance of your marketing efforts. It involves analyzing data to understand customer behavior and adjust strategies accordingly. You need to set clear Key Performance Indicators (KPIs) and regularly assess ROI.
ROI = (Revenue/Cost) x 100
Let’s consider an example:
Suppose that through the implementation of advanced data analytics and measurement tools, you were able to optimize your digital marketing strategies, resulting in a 15% increase in overall revenue. The additional revenue directly attributed to the improved decision-making is $100,000.
The total cost associated with implementing data analytics tools, training, and any other related expenses is $20,000.
ROI = ($100,000/$20,000) x 100=500%
Remember, the effectiveness of these strategies may vary based on your specific business context, industry, and target audience. Regularly monitor and adapt your digital marketing strategies to stay aligned with market trends and customer preferences.
Also, to maximize your ROI, stay abreast of trends and technologies. Continuously monitor and iterate your strategies based on the performance variations, changes, and feedback received. Also, remember that some ROI may not always be expressed solely in terms of revenue.