Success in business can’t be some vague and hazy notion. If it is to be achieved, it needs to be tangible, quantifiable, measurable.
The digital age has granted businesses the information they need to measure success. With everything recorded in zeroes and ones, the answers to almost any business question can now be found in the data.
Nowhere is the value of data so clear as in the world of digital marketing. Let’s take a closer look at how you can use data to measure your marketing success.
What is ROI and KPIs?
ROI and KPI are two of the most common acronyms you’ll hear not just in digital marketing, but in business.
- ROI stands for ‘return on investment’. This is a metric that helps you to understand whether a cost is worthwhile – whether you get out more than you put in.
- KPI stands for ‘key performance indicator’. This is a group of metrics, hand-selected by each organisation to gauge performance.
What is ROI and KPI in digital marketing?
Acronyms defined, the next question is how are ROI and KPIs represented in digital marketing?
- ROI: Measuring the performance of a digital marketing campaign is critical – if you don’t know the performance, you can’t improve it. To this end, ROI – the profit or loss that is generated by your digital marketing investment – is one of the simplest and most illuminating measures available.
- KPI: In terms of digital marketing, KPIs can be split into three distinct categories: awareness, engagement and acquisition. You’ll note that these align with the common stages of the sales funnel – research, discovery, awareness, consideration and conversion. This is because the overarching objective of digital marketing is to push people down that funnel.
How do you calculate ROI in digital marketing?
Calculating the ROI of a digital marketing campaign can be quite simple in theory, but somewhat more complex in practice.
Usually ROI is represented by a percentage. If you invested $10,000 in a campaign and earned $12,000 from it, the calculation would be (2000/10,000) x 100, which would make the ROI +20%.
This obviously represents an oversimplified example of digital marketing ROI – the true calculation would take into account a wealth of factors like taxes and auxiliary costs. It’s also important to note that ROI isn’t a reflection of net profit. It is however a great measure of digital marketing success.
What is a good ROI for digital marketing?
If we once again wanted to take an oversimplified view, we could say that any campaign with a positive ROI could be deemed a success, and any campaign with a negative ROI could be deemed at worst a failure, and at best an opportunity to learn and do better.
But the realities of digital marketing are far more nuanced than that. For one, ROI can be difficult to measure, particularly if your campaign is situated at the top of the sales funnel. It can be difficult to measure ROI during research and discovery, and even the mid-funnel stages of awareness and consideration.
The next point is that digital marketing campaigns are processes of trial and error. Google, Facebook and other platforms keep their algorithms a closely guarded secret, meaning the only way to know whether a campaign will be effective is to test it. Regular A/B testing will lower your ROI in the short term, but this negative number is simply a by-product of the optimisation phase of the campaign.
All this is to say that a good ROI for digital marketing is whatever you decide it is. So how do you decide?
How do you calculate ROI for a brand?
To set and measure ROI for a brand, a holistic view must be attained. There is a seemingly endless list of factors to take into consideration if you are to gain a truly accurate and insightful view of the situation, which can make the process overwhelming.
Happily this holistic view is exactly what the Growth Partners Digital Enablement Plan (DEP) has been designed to deliver. We use our proprietary GrowthCast technology to forecast future revenue streams, set expected ROI, and measure progress. We take the guesswork out of forecasting and replace it with science, calculating your business case strength through measurement of your ROI goals.
How do you calculate ROI for a project?
While calculating ROI on a single project is somewhat simpler than calculating ROI for an entire brand, there are still a surprising number of factors to consider, many of which you may not connect intuitively.
Our Digital Enablement Program has been designed to capture all of the relevant information, to offer you an accurate read on the ROI of any given project.
What is KPI in SEO?
Search engine optimisation (SEO) is the process of making your website as alluring to Google and other search engines as possible, which in turn will see you enjoying a higher ranking for relevant search queries. It makes sense that this process is as quantifiable as the results it can deliver, with a number of key performance indicators (KPIs) being indicative of SEO success.
Some of the most common KPIs used within SEO include:
- Keyword ranking: The headline act, measuring where your site ranks is the ultimate test of SEO success.
- Organic sessions: Website visits from search engines that are earned, not paid for.
- Conversions/Leads: Are you converting visitors once they get to your website?
- Bounce rate: If a large number of visitors leave your site without interacting with it, it may be a sign that the information featured on the SERP isn’t representative of your business/site.
- Pages/time per session: The larger the number, the better your site.
- Load time: Site performance is a key measure that Google uses to rank results.
Vanity metrics vs. actionable metrics
Humans are emotional creatures. This can see us valuing things that makes us feel good over those that offer a dose of cold, hard reality, and this can even occur in the cut and dried world of business.
Ask yourself: are you tracking certain metrics because they make you look or feel good? Such ‘vanity’ metrics do nothing more than distract you from the important stuff: the ‘actionable’ metrics that tell you how well your digital marketing efforts are driving you towards your company’s goals.
- Examples of vanity metrics: Social media likes, page views, trial users, email subscribers, leads in sales funnel, total customers acquired.
- Examples of actionable metrics: Social media referrals, conversion rate, Email opt-in rate, return on marketing investment, customer acquisition cost.
How do we measure performance at Growth Partners?
At Growth Partners we see performance as a set of meaningful, measurable numbers. By using proprietary technologies like GrowthCast, our Digital Enablement Program demonstrates the extent of your online opportunity, where to invest, how much to invest, and the projected return on that investment.
We use science and data to make better decisions, helping you to build a better business. If that sounds like something you’re interested in, click here to book a 15-minute consultation with Growth Partners Director Steve Bambury today.