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The ultimate marketing ROI guide

Tess Church

November 27, 2022

6

min read

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Measure marketing ROI the easy way with these simple formulas! Here's everything you need to know to get the most out of your marketing investment.

Do you ever feel like you're throwing money down the drain when it comes to marketing? You're not alone. Marketing can be a tricky beast, and it's hard to know if your efforts are actually paying off. 

But don't worry – we've got you covered. In this ultimate guide to marketing ROI, we'll teach you everything you need to know about calculating and tracking your return on investment. So what are you waiting for? 

Let's get started!

What is digital marketing ROI?

Digital marketing ROI is the return on investment that you see from your digital marketing campaigns. In other words, it's a way of measuring how effective your marketing efforts are in terms of generating leads or sales. There are a number of different factors that go into calculating your digital marketing ROI, but the most important thing to remember is that you need to track your results over time to see improvement.

Why is digital marketing ROI important?

There are a few reasons why digital marketing ROI is so significant. First of all, as we mentioned before, it's a great way to measure the effectiveness of your marketing campaigns. If you're not tracking your ROI, then you won't be able to tell if your marketing efforts are actually paying off. 

Additionally, tracking your ROI can help you identify which marketing channels are working best for you and which ones aren't. 

Finally, by understanding your digital marketing ROI, you'll be able to make more informed decisions about where to allocate your marketing spend in the future.

How do you calculate digital marketing ROI?

The marketing ROI formula

Now that we've talked about what digital marketing ROI is and why it's important let's get into how to actually calculate it. There are a few different formulas that you can use to calculate your ROI, but we'll just focus on one for now. To calculate your digital marketing ROI, you'll need to know the following:

  • Number of leads: How many sales converted to a lead?
  • Lead-to-customer rate: What percentage of leads became paying customers? If 15 out of 100 leads become customers, your lead to customer rate would be 15% or 0.15.
  • Average sales price: The average price of your product. An average can be helpful if you occasionally apply discounts.
  • Marketing cost or ad spend: How much did you spend on the marketing campaign?

Then you can calculate ROI with this formula:

ROI calculation

Measuring marketing ROI template

Download our marketing ROI template to help you measure ROI for your business. Find out your marketing expenses versus returns now!

[feature_link]Dowload our free ROI template here[/feature_link]


Digital marketing ROI formulas

Here are some common digital marketing ROI formulas to help you identify your ROI for each different marketing channel you invest in:

Paid Search ROI (also known as ROAS) = (Revenue from Paid Search - Cost of Paid Search) / Cost of Paid Search *100

Organic Search ROI = (Revenue from Organic Search - Cost of Organic Search) / Cost of Organic Search *100

Social Media ROI = (Revenue from Social Media - Cost of Social Media) / Cost of Social Media *100

Display Advertising ROI = (Revenue from Display Advertising - Cost of Display Advertising) / Cost of Display Advertising *100

Email Marketing ROI = (Revenue from Email Marketing - Cost of Email Marketing) / Cost of Email Marketing *100

When it comes to calculating your ROI, however, formulas alone won’t get you very far. 

You need to be able to gather the right data. For instance, do you have a way of measuring how much money you earned from your SEO efforts this year? What about social media?

We’ll cover more about how to gather these insights later on, so make sure to read to the end! Next up, let’s look at ROI benchmarks and what you should be aiming for. 

Digital marketing ROI benchmarks

This is a difficult question because so many variables are at play. Different businesses will have different goals, marketing budgets, and strategies. Additionally, the results of a digital marketing campaign can vary greatly depending on the industry.

What’s the average ROI on digital marketing?

We can look at general benchmarks to get an idea of what's considered a good ROI for digital marketing. For example, HubSpot found that the average ROI for inbound marketing campaigns is 13x. This means that for every $1 spent on inbound marketing, businesses see an average return of $13. 

Of course, your mileage may vary, and you may not see such a high return on investment. However, this benchmark gives you an idea of what's possible with a well-executed digital marketing campaign.

Another benchmark comes from Content Marketing Institute, which found that the average ROI for content marketing is 2x. This means businesses see an average return of $2 for every $1 spent on content marketing. 

Again, your results may vary, but this gives you an idea of what's possible with a solid content marketing strategy. As you can see, there's no one-size-fits-all answer to the question of what's considered a good ROI for digital marketing. It depends on your goals, your budget, and your industry. However, looking at general benchmarks can give you an idea of what's possible.

What is a good digital marketing return on investment?

The answer to this question depends on your goals and your budget. If you're a small business with a limited budget, then a 2x return on investment might be considered good. However, if you're a larger company with a bigger budget, then you might expect to see a higher ROI. 

It's also important to keep in mind that the results of a digital marketing campaign can vary greatly depending on the industry. For example, some businesses might see a high ROI from paid advertising, while others might get more results from organic search traffic. 

Ultimately, tracking your results over time is the best way to determine if your digital marketing campaigns are successful. Tracking will help you see which campaigns are working and which ones aren't. Additionally, it'll allow you to adjust your campaigns accordingly to improve your results.

Digital marketing ROI benchmarks by channel

Here are some general benchmarks for digital marketing ROI by channel:

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Paid Search: The average ROI for paid search is 5x. This means businesses see an average return of $5 for every $1 spent on paid search and Google Ads. 

Organic Search: The average ROI for organic search is 13x. This means businesses see an average return of $13 for every $1 spent on SEO. 

Display Advertising: The average ROI for display advertising is 2x. This means businesses see an average return of $2 for every $1 spent on display advertising. 

Email Marketing: The average ROI for email marketing is 4x. This means businesses see an average return of $4 for every $1 spent on email marketing. 

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As you can see, what's considered a good ROI for digital marketing varies greatly. It depends on your goals, your budget, and your industry. 

Best Practices for measuring your digital marketing ROI

Now that you know what's considered a good digital marketing ROI, it's important to learn how to measure marketing program ROI. After all, you won't be able to improve your results if you don't know how to track them. Here are some tips for measuring your digital marketing ROI:

1. Set goals and objectives

The first step is to set goals and objectives for your campaigns. This will give you something to measure your results against. Without goals, you won't be able to tell if your campaigns are successful or not.

2. Use analytics tools

There are many different analytics tools available online. These tools can help you track various metrics, such as website traffic and conversion rates. Using these tools gives you a better idea of how your campaigns are performing.

3. A/B test your campaigns

A/B testing is a great way to improve your results. This involves testing different versions of your campaigns to see which one performs better. For example, you might test two different email subject lines to see which one gets more opens. You can gradually improve your results over time by testing different elements of your campaigns.

4. Track your progress over time

It's important to track your progress over time to see what's working and what isn't. This will help you make necessary adjustments to improve your results. Additionally, it'll give you a better idea of how well your campaigns are performing in the long run.

By following these tips, you should be able to measure your digital marketing ROI effectively. Just remember to track your progress over time so that you can see what's working and what isn't. You can improve your results and get more out of your marketing campaigns with a little effort.

How we track ROI to help businesses make better decisions

At EngineRoom, we have firsthand experience helping our clients create informed decisions about their marketing spend with the backing of data on our platform. Our digital advisors help businesses set up clear business revenue goals, and we use data to help us measure and achieve these goals.

EngineRoom can track your marketing ROI

How do we do this?

We set up our platform by uncovering important target information about your business, such as your audience, segments and competitors. We then integrate your sales data from your CRM, accounting software, or CSV. We also connect analytic tracking software to have complete visibility over paid search, organic search, social ads, display and email advertising. 

Example of Google Ads ROI

All this data is used to measure attribution and return on investment (ROI) based on the business goals. With our platform, you don’t need to calculate marketing ROI using a formula as the data is presented clearly and broken down by channel. 

You get all the visibility you need to make decisions about your business on one platform. We track everything from marketing spend to revenue, leads, targets, customer lifetime value, conversion and ROI, so you don’t have to.

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Free marketing ROI strategy session*

Book a 90-minute strategy session and get a clear plan for business growth and increasing your marketing ROI.

  • Get a better understanding of your business
  • We generate a detailed report from your strategy session
  • Understand your priorities and next steps for better ROI

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How to improve your digital marketing ROI

Now that you know how to calculate your digital marketing ROI and how to track it, it's time to start thinking about ways that you can improve it. Remember, the goal is to get the most bang for your buck, so to speak. Here are a few tips to help you improve your digital marketing ROI:

1. Set realistic goals for your campaigns

If you're not sure what kind of results you should be aiming for, then you're not going to be able to measure your ROI effectively. Before you launch any digital marketing campaign, sit down and set some realistic goals. Consider what you want to achieve and how you're going to measure it. Then, once the campaign is over, you can compare your results to your goals to see if you were successful.

2. Focus on quality over quantity

It's better to have a smaller number of high-quality leads than a large number of low-quality leads. When planning your campaigns, ensure that you're focusing on generating quality leads rather than just quantity. Otherwise, you'll end up spending a lot of money on marketing without seeing much in terms of results.

3. Test, test, test

One of the best ways to improve your digital marketing ROI is to test different aspects of your campaigns constantly. Try changing up your ad copy, your call to action, or your target audience. Then, see how those changes impact your results. By testing different elements, you'll be able to zero in on what works best for your business and your customers.

4. Keep track of your progress

As we mentioned, tracking your digital marketing ROI over time is important. This will help you see which campaigns are working and which ones aren't. Additionally, it'll allow you to adjust your campaigns accordingly to improve your results.

5. Hire a professional

If you do not see the results you want from your digital marketing efforts, it might be time to hire a professional agency like EngineRoom. An excellent digital marketing agency can help you create and implement an effective marketing strategy to drive results.

Key takeaways

The key takeaways here are that digital marketing ROI is the measurement of how much revenue you earn from every dollar you spend on marketing. 

There's also no one-size-fits-all answer to the question of what's considered a good digital marketing ROI. It depends on your goals, marketing costs, and industry. However, looking at general benchmarks can give you an idea of what's possible. To effectively measure your digital marketing ROI, set goals and objectives for your campaigns, use analytics tools, A/B test your campaigns, and track your marketing strategies over time. 

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Tess Church

SEO Content Producer

Tess is a skilled copywriter and editor with over 4 years' experience working within marketing, product and content teams.