Whenever you launch a new campaign, you must test if the cost of the project is helping or hurting your company. To determine the profitability of something, many marketers analyze the ROI or return on investment. In general terms, the ROI compares the amount of money you spend on a project with the amount of income you get from it.
If you're dealing with strategies, like content marketing, it can be difficult to know if your blog posts, podcasts, or videos are leading directly to a purchase, especially when the content isn't included or linked directly to a landing page.
In fact, the Content Marketing Institute (CMI) claims that determining ROI has been a mystery to marketers for decades. Although the invention of URL tracking and other technologies have helped determine the success of content, CMI still suggests looking at ROI from a long-term perspective and taking into account non-financial gains, including audience growth.
For most companies, a good way to establish a "good ROI" benchmark for each marketing strategy is to analyze the performance of similar tactics they have tried in the past, as well as current sales figures. This information should help you create benchmarks and ROI goals that are realistic for your business.
Relevance of ROI in marketing
Any marketing strategy requires an analysis to know which campaign has been the most effective and which has not worked at all, so that depending on the results obtained it is possible to implement the necessary improvements and analyze the objectives set, which should be to increase the profitability of the company.
To evaluate and monitor the results of digital marketing campaigns, it is necessary to calculate the ROI, which allows you to analyze the results and project future actions to improve profitability in relation to investment. The relevance of ROI in marketing is that companies can invest money in the right channels, since it defines the success of each campaign implemented in digital strategies. Therefore, it must be an indispensable factor for any company that has an online presence.
How to calculate ROI?
1. Calculate the number of leads: How many people became leads?
2. Determine the lead rate: What percentage of leads became a customer? If 12 out of 100 leads converted to customers, your lead rate would be 12% or 0.12.
3. Calculate the sale price: The average price of your product, or average, can be useful if you occasionally apply discounts or modify prices in other ways.
4. Determine the cost of advertising investment: How much did you spend on creating and promoting the marketing campaign? Here you can factor in costs, including advertising spend, hourly wages of people who spend time on the project, or costs related to producing content.
When it comes to calculating marketing ROI, this is the formula you can follow:
Cuando se trata de calcular el ROI de marketing, esta es la fórmula que puedes seguir:
In addition to considering revenue, you may also want to add other non-financial items to determine if a marketing strategy is successful. These could include followers or likes on social media, unexpected traffic to your website, or even a feeling of increased trust from your customers.
While these things don't deliver an immediate financial return, they could indirectly drive purchases or customer relationships later on.