Return on investment for digital marketingThe question of how to measure return on investment for digital marketing comes up in almost every related discussion lately. The fact is, ROI often involves too many variables outside the control of most agencies, especially when it is related to the sales of tangible items compared to dollars spent. We’ll get more into that further into this article. Perhaps a better measure would be marketing value returned. Marketing value returned is simply the value of the presence created by the dollars spent.

Any web-based effort, or campaign will generate a measure of presence in terms of impressions. Impressions are the number of times an article, video, press release, any other website page shows up in search for related search terms and / or keywords. A well written, optimized, and distributed press release alone can generate tens of thousands (possibly hundreds of thousands) of impressions. An article written, optimized,  and placed on an adequate website platform can do the same over time, depending upon trending news and related search factors. A video that is shared on social media can have a similar impact. For the sake of simplification, we’ll refer to those created items as “instruments.”

Regardless of type,  all impressions have value. Depending upon many factors, that value can range from a few dollars per one thousand impressions all the way to a few hundred dollars per one thousand impressions…though the latter is fairly rare. Most will be valued in the ten to twenty-five dollars per one thousand impressions. So, measuring dollars spent compared to value of impression received is fairly easy to determine. The period of time given to determine value received to dollars spent is an important consideration. The cost of a website should be spread over all the instruments housed. Preferably there are dozens of those instruments posted annually. So, when the value of impressions received is greater than dollars spent, the difference is the marketing value returned.

So far, we’ve only talked about the “impression” and not the”conversion”…or click through to a website. We’ve established there can be marketing value returned with just the impressions created compared to dollars spent, but the true measure of an effective campaign is the number of conversions it creates. While some consider a conversion an actual sale, we’ll use it in more general terms as the expected result of the impression…or  the click. The effort to create the impression comes first, and whether it becomes a conversion depends upon how it relates to the search query in process. In years past it was possible to “trick” the search engines into sending traffic to a website based on techniques that are not longer even recognized by their complicated algorithms. The process of gaining traffic is almost completely related to the content presented. Often finding the right combination of content and keywords to create the conversion, takes considerable trial and error. The next step in conversion, after the click from the search engine, happens on your site, and is covered in more detail in our article called the Conversion Crisis  HERE.

Now lets talk about the cases where sales made of tangible items are the only goal. This is the ROI most want to measure, and this is where measuring ROI really gets tricky. Sure, its easy to calculate dollars spent versus sales gained. But, is that a true measure of the related campaign? The answer is no, most of the time. The sale often depends upon some sort of action or result on the “other” side of the website…on the company side. If the instrument(s) utilized created traffic, and the search prospect was disappointed or discouraged upon landing, that is an issue normally outside the control of the campaign. If the sale depends upon some sort of interaction by the company, that too is outside the normal scope of the campaign responsibility. ROI depends upon product quality, presentation, price, competition, and (often) effective salesmanship. I had a prospective hotel client tell me once he didn’t need more traffic, he needed ROI… traffic that converted to rooms booked. My response was, “Your solution lies within your response. If your getting sufficient traffic, your site visitors are not getting what they expected upon arrival. Either the message that brought them is skewed, or those tasked with responding to the traffic are failing to close.”

So, in closing, the question of how to measure return on investment for digital marketing should more often than not be, how to measure marketing value returned. We call it MVR for short. Don’t scrap a good campaign if your expectations are unrealistic, especially if the problem could be on your company’s side of the ROI equation. To learn if your ROI and MVR expectations are realistic,  contact iNetGolf for a complete evaluation of your website, and overall digital strategies.