The prime objective of any marketing campaign is to make it successful. To make a campaign successful it is always the output from KPIs (Key Performance Indicators) throughout the campaign. From the output of the KPIs, it is determined either the campaign was successful or not. From a business perspective, it is about the marketing ROI which tells how good or bad the campaign went. Return on Investment or ROI is the caliber to measure the scale of success of a campaign. In simple words, the difference between the amount of investment and the return on the investment is called the return on investment in marketing.
Disastrous ROI can lead to stop or cut down the project costs like we never saw the third sequel to the Jim Carrey classic, Bruce Almighty! On the other side, you will be waiting for the next sequel of Mission Impossible, right? Yes, it is the ROI that leads the project to proceed further. Let’s have a look at the financial details of the Mission Impossible series;
The release date: 1996
Box office: Total (6 films): $3.570 billion
Produced by: Tom Cruise
Budget: Total (6 films): $828 million
ROI: 2.672 billion
What’s good marketing ROI?
If you are making more than a dollar for every dollar you spend on a marketing campaign it means the marketing ROI is good and vice versa.
The marketing strategy, distribution channels, and the industry impact on the “good ROI” in marketing. This logic is true because all marketing tactics are different so does marketing ROI benchmarks.
If you are dealing with an online ad strategy like PPC, and all the data is tracked through the servers of Google, it is much easy to see how your ads return in comparison to others.
Another way, if your marketing strategy involves content marketing, blog posts, podcasts, or videos, it might be hard to find out if it was your content that pays you back in the shape of leads and/or customers.
Content Marketing Institute, one of the leading online platforms teaching about content marketing, states that it is almost hard to determine marketing ROI.
Let’s consult businesses to get to know marketing ROI from their perspective. They have set a very simple formula and that is if you earned more than what you earned in past from the same strategy with the almost same spending including current sales numbers. From these simple lines, it is easy to create ROI benchmarks and goals that are realistic for your company.
Marketing ROI formula
[((number of leads x lead-to-customer rate x average sales price) – cost or ad spend) ÷ cost or ad spend] x 100.
Identify the following things to use marketing ROI formula;
- Number of leads: how many visitors converted to lead
- Lead – to – Customer rate: how many leads converted to customers.
- Average sales price: The average sales price of your product.
- Cost/ad spend: how much did you spend on creating and promoting the marketing campaign? This cost includes ad spend, hourly wages of people who put time into the project, or cost-related to producing content.
Marketing ROI examples
From the facts of the 2018 State of Inbound Report, 82% of marketers observed a positive ROI in their inbound marketing strategy.
The cost to produce blog post is quite less than the cost to produce video content but it still cost you time and money. The related costs to calculate are time-related costs, production costs, and promotional costs into your total spending.
Let’s translate time into a dollar amount and for the purpose, track the number of hours that an employee spent on the project and then multiply that number by their hourly wage.
For example, if you pay $10 an hour and it takes 3hours to write a promotional post, your total cost will be $30 in labor.
The promotional cost will be separate and will be added after the spent.
If your blog post linked to a landing page then you must need a tracking URL instead of a basic page URL. Having a tracking URL will help you find how many visitors are coming to the landing page directly from your blog post.
Next, if the blog post visitor is converted to the lead, and the customer then you will be able to see how many leads and customers your blog post bring to the business. Finally, you will be able to find how successful your marketing strategy remains.
A law firm focuses on divorce settlement cases and wants to gain more clients. They write 7 blog posts on divorce settlement rights. Each post is assigned a tracking URL that links to a landing page where prospects can request a Free Legal Consultation.
The firm spent $900 on the blog post draft and $100 to promote it. All 7 blog posts create 10 leads – four of which become clients. The firm made an average of $1500 per client.
Here’s how their ROI would be calculated:
This marketing segment is thought to be dead but it is not true. Even I myself clicked the link given in the email from Neil Patel. In fact, a business can make $38 dollars for every dollar they spend on an email. There are many good examples of the real-world where people getting marketing ROI through email marketing.
about 83% of marketers are convinced with their personal experience that video marketing is so helpful in their marketing strategy. Research your product from the customer point of view and spend a handsome time handful of money to produce video content.
Pay Per Click is a great way to market your product by reaching your prospects. Google says its advertisers to get a strong marketing ROI, but small businesses still waste 25% of their budget on not so well managed PPC campaigns.
There are a number of tools that can help you monitor and manage live PPC campaigns, utilize them.
Best practices of measuring marketing ROI
Determining marketing ROI is tricky. If you are running PPC or paid social media ads then it is quite easy to find out the Marketing ROI over the platforms. But when it is about things like content marketing it is kind of tricky to trace the benefits to the business.
It is advised to monitor the following factors to determine if marketing ROI is good or not.
- The time you spent to create the promotional content of any type.
- The production cost will include the total cost of supplies, services, and software needed to create the campaign.
- The total cost of the promotion spent
- Use a tracking URL to get the page analytics
- If you gain any social media engagement, unexpected traffic boosts, or other benefits from your campaign then this still helping your level of brand awareness.