When we design the structure for online marketing, there are some key features that we have to keep in mind. A major criterion that determines the whole process is the amount of investment that is made in the whole project. If an ad is due to run, then the process of planning is an investment and the whole idea of the project should be a good ROI. ROI can be defined as a key metric that measures the profitability of an online marketing system. The basic formula to calculate this is the net formula divided by the total investment multiplied by 100.
ROI analysis –
This is a critical tool that defines the effectiveness and profitability of an online campaign, ad or marketing strategy. Here is how it is typically done –
- Start by defining your goals. It is important to know what your long-term goals from the investment are. These could be specific outcomes such as increasing sales, generating leads, or improving brand awareness.
- Now that you know the goals of your marketing campaign, it is time to set the Key Performance Index and monitor these regularly. These can be clickthrough rates and cost-per-acquisition rates.
- Determine all the costs associated with your online marketing campaign, including advertising costs, creative development, software or tools, and any other expenses.
- Now track the results of your online campaign through the KPIs that are relevant to your goals. this will help you understand how well the campaign is working.
- Calculate the ROI on a regular basis using the following formula – Revenue – cost divided by cost. Multiply by 100 to get a percentage value.
- The next step is to analyse and optimize the ROI based on monitoring. Check the results consistently and analyse what is going wrong. If the returns are good what is working well? Can it be used in campaigns ahead? Knowing a detailed result is necessary to analyse ROI.
- The insights gained from your analysis are going to be a very powerful tool which will help you iterate and improve your strategy in upcoming campaigns. This will not only improve your online campaigns but also get you more returns on your investment.
Wrapping it up –
If you are a business owner and invest in regular ad campaigns then calculating ROI on a regular basis is a necessity. You need to know how much investment goes in and what amount of returns are coming back. If an investment is not giving you the desired results, the only way of knowing it is through ROI analysis. This can be done through monitoring according to your goals, optimizing content according to your goals and tracking ROI and costs on a regular basis.