In the fast-moving world of digital marketing, it is essential to know whether or not you are collecting a return on your investment. It’s easy to become absorbed in likes, shares, and clicks, but your main objective is ROI — Return on Investment.
Tracking ROI (return on investment) during your digital marketing campaigns will help you understand what is working, what is Misusing your budget, and where you should be spending your time and money for the best results.
If you’re curious about how to measure ROI, in this guide, we will explain what to track, how to measure it, and why it’s essential
What is ROI in Digital Marketing?
ROI is the ratio of net profit to marketing investment costs. such as
ROI = (Promotion Revenue – Cost of Promotion) / Cost of Promotion
A positive ROI is known as you made more than you spent. A negative ROI means there wasn’t enough value generated from your campaign.
Why Track ROI?
Budget optimization – Learn where and on what marketing it makes sense to invest more or rein back
Performance Evaluation – See how effective each campaign was
Smarter decisions – Finite resource distribution towards best performing channel
Real business outcomes – Invest in marketing, and report back on actual business outcomes
How to Evaluate ROI from Your Digital Marketing efforts
Here are the key steps to apply:
1. Your purpose and KPIs.
Before you can evaluate anything, You need to define what success looks like. Your KPIs (Key Performance Indicators) can be any of:
Sales/revenue,
Leads,
Website traffic,
Costs per acquisition,
Return on ad spend (ROAS)
2. Include all marketing costs.
You will want to include all the costs involved in running your campaign:
Media spend (Google Ads, Facebook, etc.),
Tools/software (email marketing, SEO tools),
Freelancer/agency spends,
Cost for content creation,
Cost for team time (depending on measurability).
3. Use analytics tools.
You will need reliable data in order to track results.
You can use the following tools that help you with this.
Google Analytics 4 (GA4) – Conversion tracking, source /medium, revenue
Facebook Ads Manager – ROI, cost per result, ROAS
HubSpot / Zoho / Any of these CRM tools – Lead quality and sales attribution
If you are using UTM Parameters to track links across platforms, you can also shorten tracking links by using Bit.ly or Google’s Campaign URL Builder.
4. Calculate ROI
ROI = (Total Revenue – Total Cost) / Total Cost x 100
Let’s use an example:
Strategy revenue = 70,000
Strategy Cost = 20,000
? ROI = (70,000 – 20,000)/20,000 = 2.5
5. Review and Compare performance.
You can breakdown your ROI by:
Channel (i.e. email vs. Google Ads)
Strategy type (i.e. video vs. carousel)
Segmented audience
Period of time (i.e. first week vs. whole month)