How successful is your marketing campaign?
When measuring the efficiency of marketing efforts, many companies focus on generated leads and conversion rates. In reality, the key metric is the return of investment (ROI).
No matter how successful your marketing tactics are, you may be neutralizing the benefits if expenses are too high. Meanwhile, by improving your marketing ROI, you are always boosting your company's profitability.
What is marketing ROI?
Marketing return on investment is exactly what it sounds like: the relationship between the value gained by implementing a marketing strategy and the cost of the marketing investment. The simple formula for calculating marketing ROI:
ROI = (Return - Investment)/Investment
For example, you invested $7,000 in your marketing campaign, and your company's revenue increased by $10,000.
ROI =(10,000–7,000)/10,000 = 43%
A "good ROI" can differ for each company depending on the marketing strategy type, distribution channels, and the industry.
How can you improve your marketing ROI?
Improving your marketing ROI is integral to getting the most out of your campaign. The following are five such ways to improve marketing ROI:
1. Integrated Marketing
Integrated marketing involves using different channels to promote your products and services while creating a seamless experience for your clients. Integrated marketing doesn't just work with digital channels. It encompasses traditional media channels as well.
- Using radio to promote your lead generating contest and enhancing it by emailing your contest to their highly targeted email database.
- Incorporating a text keyword into your radio advertising that gives a specific call to action to the listeners who want to “learn more” or register to win a prize from your business.
- When running a contest, offer additional incentives to win by asking the registrant to follow you on social media, sign up for your text club, download your app, or sign up to receive promotional emails from you.
- Incorporating radio influencers' quotes or photos into digital ads.
- Expanding outreach by running radio ads when your target audience doesn't use the internet (like the commute to work) and vice versa.
- Use third party platforms to create fun content such as quizzes and polls that engage people on your social media channels. Use email as an additional distribution channel for this fun content.
By taking advantage of multiple marketing channels, you can reach more customers and improve their journey down the sales funnel. This can lead to revenue lifts that aren't possible when using just one channel.
2. Set Goals with OKRs
OKR (Objectives and Key Results) goal-setting system can help you improve your marketing ROI in a structured manner. It consists of two major components:
- Objective — the goal you want to reach
- Key results — set of metrics (2 to 5) to measure your journey toward the Objective
When it comes to marketing, you can turn "Better Marketing ROI" into an objective and set the key results accordingly. They could be:
- Improve the conversion rate from A% to B%
- Lower cost per lead from $X to $Y
- Increase customer lifetime value from $N to $M
This allows you to measure progress to see how well you are moving toward the Objective.
3. A/B Test Ad Campaigns
A/B (also known as split) ad testing involves running two similar versions of the same ad to see which one works best. When it comes to paid ads, investing in the wrong choice could affect the ROI of the entire campaign.
When designing an ad, you could play around with different versions of:
- Ad creative (visuals, text, headings, fonts)
- Marketing channels (radio, search engines, TV, social media)
- Target audience segments
One small detail can make a significant difference. One ad can generate 20 sales while another one only brings 10. If you invest $100 in each of them, the cost per sale for the first ad would be $5 while each sale from the second ad would cost you $10. If you'd have run only the second ad, your marketing ROI would have been significantly lower.
4. Marketing Automation
Many elements of your marketing campaign can be automated. It includes retargeting, paid search marketing, a/b testing, programmatic ads, email marketing, and much more.
By taking advantage of the available automated marketing tools, you can improve ROI by giving your employees more time to focus on revenue-generating tasks.
5. Marketing Specialists
Instead of relying on a team of marketing generalists, you can increase marketing ROI by working with specialists. For example, the Return on Ad Spend (ROAS) for a specialist in Display ads will be higher than ROAS for someone to whom display ads are only part of a bigger task.
While working with specialists in many niches can give your marketing revenue a significant boost, hiring full-time experts can be costly. The best way to improve ROI by working with specialists is to team up with a marketing agency.
You can get access to a team of full-time experts at a fraction of in-house salaries. You can use their services as needed for different marketing campaigns.
A High Marketing ROI is the Key to Success
By focusing on a high marketing ROI, you don't just increase the company's profitability. You can improve the quality of your campaign. To ensure top-notch results, you can use the above methods simultaneously.
Start setting clear goals for your marketing campaign across different channels to achieve the highest possible ROI in your industry.