Before the pandemic, marketing experts forecasted that companies would spend 14.4% more on search ads in 2020. However, online search queries fell early in the pandemic, leading marketers to see less return on investment from paid search ads than they expected. Still, marketers anticipate a 5.9% rise in search ad spending in 2021. Why? Because the pandemic has permanently changed shopping habits, placing a greater focus on e-commerce and boosting online searches.
This major change highlights the need to understand how to measure ROI on digital marketing expenses. Tracking digital ad spending is always changing with the marketing and tech world. Just because a paid search investment didn’t yield a high ROI in 2020 doesn’t mean it won’t in 2022. By evaluating the ROI of each strategy in your marketing plan, you can identify what works and what doesn’t, allowing you to adjust your campaigns to generate more revenue.
To illustrate this point, consider a client I worked with who lamented landing only three leads in one month. At the time, however, we were optimizing their marketing budget for ROI, so we saw how much revenue each lead actually generated. In fact, one of the leads amounted to a $3 million sale. The client was pleased — but they wouldn’t have been if we only showed the three leads rather than the specific ROI.
Of course, measuring key performance indicators (such as the number of conversions, conversion rate, and cost per conversion) is important. But measuring marketing ROI is what really matters for your business’s bottom line.
How to Measure ROI on Your Marketing Spend
So how do you measure the return on your marketing investments to ensure you’re getting the best results? Marketing ROI analysis is all about organizing and tracking your data using attribution. Marketing attribution helps you determine which touchpoints potential customers use in their journey to conversion. Essentially, it measures the money you make on each marketing tactic, campaign, and channel, which gives you better insights into which parts of your strategy succeed and which need to be revisited for greater ROI. Here are the best attribution strategies to use when measuring your marketing ROI:
1. Use a robust CRM that allows for customization.
Your customer relationship management platform measures how your customers and potential customers interact with your company online. If you’re wondering how to measure ROI on marketing spend, start here with attribution. An advanced CRM that gets as much information about customers as possible enables you to learn more about your audience’s journey.
Integrating the data you gather from your CRM with your point of sale and marketing data can provide the most accurate ROI calculation on how much revenue was generated by the digital ad spend of a specific campaign. For example, you can see how ROI changes for Facebook when running a Facebook campaign along with a display campaign. You also can gather ROI information from a Facebook campaign running alongside a paid search campaign. Then, you can see not only the total ROI of both campaigns added together, but also the ROI changes when running other tactics and channels alongside it.
2. Remember your tracking elements.
Tracking elements such as Urchin Tracking Module codes or short code URLs isolate leads by source in both Google Analytics and your CRM. By tracking each website visitor by how they were referred to your site, you can better measure the success of your digital campaigns and determine which channels should get the most spend. In addition to lead source, track every conversion by using form fills with tracking elements in them, as well as call tracking. This allows you to better analyze your form submissions, website views, and more. You can also measure the leads or sales that come from these channels.
For example, say someone comes to your site after looking at one of your company’s paid search ads, but they don’t convert. A week later, they come to your site through a direct Google search and download one of your e-books. After they get an email about the e-book, they finally contact you and become a customer. Each of these channels played an important role in securing the customer. But without proper tracking elements and attribution, you wouldn’t know that they generated ROI.
3. Review digital ad spend and revenue generated per tactic.
Analyzing digital ad spend and revenue generated per tactic helps determine the ROI of each of your tactics, as well as the total ROI of each multichannel marketing strategy. Conduct this audit a minimum of once per quarter to get the most accurate marketing ROI analysis. This is especially important if you have a long sales cycle, which can make it difficult to analyze ROI for a specific month. After all, many of the leads generated in a month probably won’t convert until two or more months later.
With a quarterly review, you can get a complete picture of the results of your campaigns and therefore decide where to dedicate your time and resources next quarter. Over time, this should increase your marketing ROI.
When it comes down to it, companies spend money on marketing to increase revenue. By understanding how to measure ROI on your marketing spend, you’ll be able to see what campaigns, channels, and tactics are generating that all-important profit. Then, you can keep what works and ditch what’s lagging.
If you want more tips on connecting your digital ad spend to results, download my company’s free webinar: “Maximize Your Marketing ROI in 2021.”