Mastering the art of marketing is your secret weapon in 2023. Think of it as a crystal ball, revealing the path leading to that pot of gold.

The first skill you’ll need to hone is your data and analytics know-how. Specifically, ROI (return on investment).

This guide will help you unravel the concept of ROI in digital marketing. We’ll explain how to calculate ROI and use this figure to improve your promotional efforts.

What Is ROI in Digital Marketing?

Return on Investment, or ROI, is a measure to determine if your marketing is effective. It’s a snapshot that will tell you if you made or lost money on that marketing investment.

In simple terms, it will help you understand whether each marketing dollar has made you a profit.

Calculating your ROI, you can compare your marketing campaigns and pick the most profitable ones. It will help stretch that marketing budget further.

How to Calculate ROI

You don’t have to be a math wizz to figure out ROI. It’s a simple formula. You take your revenue minus the marketing cost. And once you have that figure, divide it by the marketing cost.

For example, you spend $1000 on a marketing campaign. And you make $3000 in revenue. Your net gain is $2000. You divide this by your marketing cost of $1000.

Your ROI is two and will be 200% in percentage terms. You’ve made twice as much money as you’ve spent on marketing.

Key Performance Indicators and ROI

You must understand KPIs (key performance indicators) as these link to your ROI. A KPI is a set of measurements for your marketing campaign. That could include a click-through rate or acquisition cost.

KPIs are often your first indication that something isn’t working before you get to the point where you realize you have a poor ROI. So always track KPIs on every marketing campaign.

How to Use ROI to Improve Your Campaigns

When you have your ROI, you must know how to use this figure to shape your marketing campaigns. The first rule is to double down on a positive ROI.

A positive number means you are doing something that’s working, so you must apply similar strategies in the future.

If it’s negative, don’t scrap the campaign entirely. Look at the bottlenecks and the weak points. There is a chance that one small factor is having a knock-on effect on the rest of your campaign. This guide to digital marketing has more information on that.

Using Tools to Measure ROI

Using professional tools can streamline the process of measuring and tracking your ROI. Always use an analytics platform that will provide granular digital marketing metrics about your website and ads.

Create reports that will help you see your ROI at a glance. If you use platforms like social media for marketing, ensure you have a tool to track your activity inside those platforms too.

Unleash the Power of ROI

Understanding how to calculate ROI is pivotal in driving marketing success. Try using ROI in your next promotional campaign. If you succeed, watch what this magic figure can do to your profits.

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