Promoting a small business or agency is crucial to attracting and keeping new clients. However, one can throw a lot of money at marketing and not see results. It’s crucial to pay attention to metrics and make sure the return on investment (ROI) is worth it. If not, companies can always replace low-performing ads with new ones.
Even if a business owner knows the importance of tracking ROI, there are many different ways to measure success. Start by knowing what goals for different campaigns are so company leadership knows how to best measure results.
What Is the Difference Between KPI and ROI?
In a recent survey of advertising decision makers, researchers predict a 6% increase in ad spending for 2023. Understanding the difference between key performance indicators (KPI) and return on investment helps marketers see the big picture and understand the best ways to measure different moments in any advertising campaign.
KPI tells businesses how well a specific component in a specific ad works. On the other hand, the ROI shows the big picture of how well a campaign went and whether each investment was worth the amount spent.
Here are top tips for tracking ROI and metrics to watch:
1. Estimate Awareness
Some measurements don’t come in the form of a dollar sign but in brand recognition. Even if the goal of an advertising campaign isn’t sales, marketing departments can track results by looking at factors such as number of mentions of the campaign or ad, shares on social media or how many likes a post or ad gathered.
While companies can’t measure ROI of brand awareness directly, they can measure increased website traffic to their websites or social media pages, number of mentions on social platforms and any additional buzz about their brand.
2. Use a Formula
One of the best ways to gauge ROI accurately is by using a formula to calculate results. One formula is taking total profit, subtracting investment and then dividing by the investment. If you spend $1000 and earn $1500, the profit is $500. Divide $500 by $1000 and get the percentage of ROI.
If the results aren’t monetary, figure out how much each new customer is worth, track the number of site visitors from the advertising efforts who then convert to customers. Take the total number of customers and multiply by what a new customer is worth. Subtract the investment by the total and then divide the profit by the investment.
No matter the metric tracked, a formula can help determine whether the investment was worthwhile.
3. Engage Users
Another metric some marketers want to track is whether promotional efforts created more engagement among followers. The best way to determine this ROI is by knowing what engagement was prior to the campaign.
Most social media platforms offer analytics so users can track how much engagement happens on a typical day. Compare the days of the marketing campaign to see what increased and what didn’t.
Engagement often appears in the form of likes, shares and conversations with users. However, it can also be a click on a link. Determine which metrics matter most to the campaign and track them.
4. Tap Into Mobile Usage
Approximately 50% of mobile device users spend about six hours a day on their devices when not working. Catering only to desktop users can throw off the metrics and not give a true picture of ROI.
When figuring out which efforts had the best results, companies can also track both smartphone and desktop users separately. Some types of marketing efforts work better with mobile users than others.
5. Follow Clickthrough Rates
Another metric that gives a good indication of how successful a marketing campaign was is how many people clicked on the link and visited a landing page. Each ad should have its own landing page so brands can see which efforts had the best clickthrough rates.
It might be tempting to take a shortcut on this step and have a single landing page for the entire campaign. However, having separate landing pages helps quantify each KPI for each specific advertising effort. When things underperform, marketers can stop that particular money drain immediately and move to the next one on the list.
6. Pay Attention to Google Analytics
Dig into Google Analytics (GA), which will tell how many visitors arrived at your site and from where. A company can also figure out if they stayed a few minutes or bounced away. While looking at things such as clickthrough rates from a social platform tells how many were interested, looking at GA tells if they were a good match.
While GA alone and clickthrough alone doesn’t give a full picture of how well an ad campaign performed, looking at everything together tells more of the full story.
7. Track Conversions
One of the simplest metrics to measure is how many conversions resulted from an advertising campaign. Send people who respond to a specific landing page. Track GA to see who moves forward from the landing page to the call to action. Finally, how many actually complete the desired action compared to the number arriving on the landing page?
If the conversion is to make sales, the number of revenue makes it simple to see ROI. If it was simply to gain newsletter subscribers or leads, the math becomes a bit tricker but ties back to how much each new customer is worth over time.
Why Tracking ROI Is Crucial
Seeing how well any campaign performed helps marketers refine their efforts over time. Tracking ROI might seem like a bit more effort than some smaller teams want to make. However, the results pay in better advertising efforts each time. Track a few metrics for ROI and see how it changes future campaigns.
