When it comes to digital advertising or really any major form of marketing used today, one of the top considerations is return on investment, or ROI. When you work with a digital advertising agency to boost your online marketing visibility, how do such agencies measure and improve your ROI on a continuous basis?
At iNHouse Advertising, we’re proud to serve as the top digital advertising agency in Tulsa, working with clients across numerous sectors and business types. Here are some basics to know when it comes to how digital advertising agencies like ours measure and improve ROI, from the key metrics we focus on to the tools and strategies we can utilize.
Metrics to Help Define Digital Marketing ROI
While this is far from an exhaustive list, and there are dozens of niche or nuanced metrics your digital advertising agency may look into to pinpoint your success, here are some of the metrics that are most commonly used in this area:
Conversion Rate (CR)
One of the most well-known metrics, conversion rate is a measure of how many website visitors or ad viewers take action that you would like them to – whether it’s filling out a form, making a purchase, or subscribing to your newsletter. This can provide insights into the effectiveness of your campaign and website design.
Cost Per Lead (CPL)
This metric calculates the average cost per lead acquired through your digital marketing efforts. It can help you understand which channels are most cost-effective for generating leads and where you may need to adjust your strategy.
Click-Through Rate (CTR)
CTR measures the percentage of people who click on an ad after seeing it. A low CTR could indicate that your ad is not resonating with your target audience or that your targeting is off. Tracking CTR can help you optimize your ad copy and targeting to improve performance.
Customer Retention Rate
This one is a bit more nuanced to calculate, as it involves tracking and analyzing customer behavior over time. Essentially, customer retention rate measures the percentage of customers who continue to engage with your business or make repeat purchases. It is a key metric for understanding the long-term success of your marketing efforts and identifying areas for improvement in customer satisfaction and loyalty.
Cost Per Acquisition (CPA)
CPA is a metric that shows how much it costs you to acquire a new customer. This includes all expenses related to acquiring a new lead or sale, such as advertising costs, salaries, commissions, etc. Understanding your CPA can help you evaluate the effectiveness of different marketing channels and campaigns and make data-driven decisions about where to allocate your budget.
Lifetime Value (LTV)
Also sometimes called customer lifetime value (CLV), this metric shows the total revenue a customer will generate for your business over their entire relationship with you. Understanding the LTV of your customers can help you determine how much you should be willing to spend on acquiring new customers and retaining existing ones.
Net Profit
And finally, net profit is the total amount of revenue your business earns after deducting all expenses, including taxes. This metric gives you a clear picture of how profitable your business truly is and can help you make strategic decisions about cost-cutting measures or revenue-generating strategies.
Key Tools Used
While this once again is not a complete list, and there are numerous quality tools that can be utilized to identify and improve digital advertising ROI, here are some of the top examples:
Google Analytics
Google Analytics is a free and powerful tool that provides detailed insights into website traffic, user behavior, and conversions. By setting up conversion tracking and linking it to your digital advertising campaigns, you can easily track the ROI of each campaign and make data-driven decisions about future ad spend.
Facebook Ads Manager
For businesses utilizing Facebook advertising, the Ads Manager platform offers valuable metrics such as cost per click (CPC), cost per acquisition (CPA), and return on ad spend (ROAS). These metrics can help you optimize your ads for better performance and determine which campaigns are providing the highest ROI.
HubSpot
A common tool for inbound marketing, HubSpot allows businesses to track the effectiveness of their digital marketing efforts. From email campaigns to social media posts, HubSpot provides analytics on click-through rates, conversion rates, and more. This data can help businesses refine their strategies and improve overall ROI.
SEMRush
For businesses looking to improve their search engine optimization (SEO) strategies, SEMRush is a valuable tool. It provides keyword research, backlink analysis, and site audits to help businesses understand their online presence and make data-driven decisions for improvement.
At iNHouse Advertising, we’re proud to serve as the top digital advertising agency in Tulsa, helping clients with everything related to their digital ROI and how to maximize it. Contact us today to learn more about how we can help your business succeed in the digital world.