No matter your title, your industry, or the type of marketing you use to promote your business, one of the most vital statistics you can track is your marketing return on investment, or ROI. Your ROI not only gauges the effectiveness of your marketing campaigns, but helps plan your marketing budget for months and years to come.
The best way to measure your ROI will vary slightly depending on your preferred marketing method, but there are some basic principles you can apply across the board.
If You Really Want to Know, Just Ask
For traditional forms of marketing like local media, tracking your return on investment can sometimes be difficult. Print ads, radio spots, and billboards provide lots of visibility for your brand, but the only way to establish a direct correlation between the advertising and your conversions is to ask customers what encouraged them to choose your business. This method can produce mixed results, though, as customers’ responses may not always be entirely accurate.
Metrics and Analytics
If you are using cost-per-click (CPC) or cost-per-thousand (CPM) advertising through a service like Google or Yahoo, you already know how many impressions your ads are making. To measure your ROI, though, you’ll need to be able to track the number of conversions completed once a prospect has gotten to your site from an ad. This usually involves an analytics solution that places a cookie on a prospect’s computer whenever they click on one of your CPC or CPM ads. Many advertising providers also provide no- or low-cost solutions to allow tracking of conversions and, ultimately, your marketing ROI.
For businesses using a third-party email marketing provider, conversion tracking is often included as a feature. In cases where it is not, marketers can use the same type of analytics software as those available for CPC and CPM providers.
Now that you know how to measure your ROI, how do you go about increasing it?
Maximizing ROI
If you’re using traditional media, and are unable to accurately pinpoint your ROI, it will likely be difficult to effectively increase it. Adding web and new media marketing to your plan will help you to better track – and subsequently increase – your ROI.
If you’re already using CPC or CPM, you should analyze your campaigns to determine which keywords and ad placements have historically provided the best return. Once you’ve pinpointed your most profitable ads, you can redirect a portion or all of your marketing funds into these and similar ads.
If you don’t have enough historical data to determine the best ROI over time, you can test different combinations of keywords and ad placements over a short period of time. At the end of your testing period, you can proceed using the ads that produced the most favorable ROI.
Never Stop Improving
Once you’ve found the combinations that produce the best ROI, you might think you’re done, right? Wrong! It’s always a good idea to keep testing new and varied content and placement. You never know when you might find the magic keywords that push your marketing ROI to the next level.
