In today’s world where technology is a giant wheel that everyone wants to push, marketing has also gone digital. Around half of the population now uses smartphones to have a social media presence and have a subscription to various OTT platforms. To leverage this opportunity most of the early businesses are taking refuge in social media platforms to attract the audience, using digital marketing as a tool to promote their products and services.
With the ongoing demand, there has been a rise in the number of digital marketing agencies offering maximum benefits to clients through digital marketing strategies.
What are Digital Marketing strategies-
Digital Marketing strategies are those methods whereby a company makes maximum use of e-sources to reach the target audience across online channels. It is a combination of some strategized actions that align with the company’s goal and consumers’ requirements.
These strategies are developed to create an online persona of your brand so that consumers are aware of your online presence and can help in increasing the customer base.
What is Return on Investment-
Digital marketing ROI is a financial metric that calculates the profits or losses gained through a company’s digital marketing efforts. Simply put it is a calculation of the return that your company has received after investing a considerable amount of money in deploying digital marketing strategies across various channels.
If the return or revenue is more than the investment you put into running the digital marketing campaigns, it is a positive return on investment. A positive return on investment is an indicator that your digital marketing campaigns are generating a considerable conversion rate.
Due to the multi-dimensional and moving nature of the digital world, a positive return need not be expressed in monetary terms, instead, if your digital marketing efforts are generating leads for you and the conversion rates are higher your ROI is considered positive.
A negative return on investment is when the cost of various digital marketing campaigns could not generate the desired return for the business. Surprisingly in the domain of digital marketing strategies negative return on investment is not always considered a bad phenomenon.
As discussed earlier digital marketing ROI cannot be completely expressed in tangible monetary terms as the digital marketing strategies are mostly longer-term strategies and only the data-driven insights like conversion rates and lead generation can provide a clearer picture of the return on investment your digital marketing efforts are generating or not.
A traditional, single return on Investment model is no longer adequate to determine the positive return and negative return of a company’s digital marketing strategies. The ever-shifting digital landscape calls for different digital marketing strategies for different online mediums.
How to optimize the Return on Investment for Various Digital Marketing Strategies-
To rely on the cost and revenue model to determine the ROI is not enough in digital marketing. Return on investment to measure the success of digital marketing campaigns would give only a narrow and surficial result.
Different digital marketing strategies have different end goals. Also, some campaigns can take a longer time to show their impact. Here are some important performance indicators that would better help in determining the digital marketing ROI-
1. Click-through rate- Click-through rate is the metric that determines the response of the audience when they see a call to action or an advertising campaign. A higher CTR shows that the deployed digital marketing campaign was successful in getting the engagement of the audience and made them land on the desired page.
2. Conversion rate- It is the most trusted formula to determine the digital marketing ROI. Conversion rate showcases the direct impact of a digital marketing campaign and determines whether the audience completed the action required after landing on your website. A higher conversion rate directly impacts the revenue of the company therefore a reliable metric to evaluate return on investments.
3. Cost per acquisition- This digital marketing metric suggests the cost incurred on acquiring a new customer on board. Cost per acquisition is a standard measurement of evaluating the efficiency and impact of your digital marketing efforts and determining the return on investment. If the CPA is higher than the value a customer brings to the company, it is a negative return on investment.
How to evaluate and improve the Return on Investment for Various Digital Marketing Strategies-
Here is how to maximize the Digital marketing ROI through evaluation and improvement in the existing digital marketing campaigns-
1. Search Engine Optimization (SEO)-
SEO is one of the initial strategies that a digital marketing campaign incorporates into the online presence of the company and increases the visibility of the product in the competitive market. By garnering engagement and impressions from the target audience it can improve the ROI of a company through lead generation and acquisition.
In monetary terms, the financial return that a campaign receives through its SEO strategy can only be determined in long term. So, to calculate the ROI for the short term, businesses evaluate the impression, traffic, and conversion rate that an SEO strategy generated and compare it to the cost of implementing the SEO strategy.
Comparing the organic traffic, evaluating brand awareness, and monitoring the search engine ranking and backlinks are some sustainable ways to measure the ROI acquired through SEO strategy.
2. E-mail Marketing-
This strategy is the highest revenue-generating tactic in digital marketing. An E-mail marketing strategy ensures a direct and tangible ROI in a business. Having well-crafted, cultivated, and targeted e-mail marketing can increase the reach and engagement of your business to the next level.
Monitoring the e-mail open rate, click-through rate, and conversion rate give you a fair idea of the impression and engagement your e-mail strategy generated. Comparing it with the cost of curating and sending the mail measure the return.
3. Search Engine Marketing (SEM)–
SEM is a strategy that can improve ROI in a short-term period. While sponsored advertisement help in better positioning of the brand it also helps in gaining immediate response from the target audience.
You can improve the ROI through SEM by making optimal use of google analytics to track your website traffic. To get unbiased insights on how the SEM strategy is working for the company you can also go with a third-party tool for better results.
4. Content Marketing-
When it comes to Return on Investment, Content marketing is one such digital marketing strategy that is difficult to measure. It is directly not related to the revenue of a company still there are many ways to evaluate how your content is performing.
ROI in content marketing can be measured through the conversion rate, website traffic, and lead generation. Additionally, metrics such as page view, and bounce rates can be evaluated through google analytics.
To improve the ROI from your SEM strategies work with clearer goals and well- a defined target audience. Try to make a separate strategy for different online channels. You can retarget ads to reach the audience who interacted with you in prior phases. Always use various social media analytics tools for the occasional evaluation of your strategy.
A return on investment in the realm of digital marketing depends highly on focused goals, target audience, well-utilized channels and amazingly curated strategies. To ensure a sustainable ROI try to indulge in multi-channel marketing, start with a few performing indicators and show patience and perseverance to witness the results.