Estimating ROI on Online Marketing Campaigns

Putting together an online marketing plan involves a lot of components and one to consider is your estimated return on investment. Whether you are agency-side writing a plan for another company, or company-side writing or receiving that plan, ROI will often be the factor that influences whether the plan gets implemented.

So Why is ROI Important?
ROI will provide an indication of what the estimated return will be on your online marketing spend. An ROI calculation will often be based on the expected response rates for activity which then depending on your organisation, can often be extrapolated to predict some type of financial return.
Without some indication of the potential success of your campaign many organisations will hesitate to commit budget to it. In addition to this, calculating ROI will also let you predict your response rates and therefore can influence the amount you need to spend in order to get the required results.

What ROI Figures are Important?
ROI will often mean different things to different organisations and the key measures will depend on what stage your organisation is at (eg. Start up, established) as well as what the objectives of your online marketing are (eg. Traffic driving, sales, sign ups etc). Some typical figures that will be in ROI calculations include:
• Amount of traffic to the website
• Reach or visibility of a campaign
• Competition/survey entries
• New database registrations
• Product sales
• Offline numbers such as visitors to a store, attendance at an event etc.
Some of these numbers are easier to estimate than others and the further down the sales process you are trying to go, the more information you will require about existing customer processes.

How is ROI Calculated?
The measurability of the online medium gives us the opportunity to estimate response rates based on industry standards and past campaign experience. This data needs to be compiled together with your businesses current online statistics in order to make some assumptions – such as, “if we drive 10,000 people to the website, how many of them can we expect to register”. By tracking and documenting your current conversion rates for these types of activities, you will have a knowledge base to assist your ROI calculations.

Calculating ROI Per Tactic
Each online marketing tactic such as search, email campaigns, banner advertising etc will have their own industry standards and benchmarks which you can use in your ROI calculations. Over the next few weeks I’ll go through these tactics one by one to provide some guidance with these numbers as well as sources for relevant industry standards that you might find helpful.

One Response to Estimating ROI on Online Marketing Campaigns

  1. seoitright2 says:

    awesome! had a look at some other posts, will add to feed!

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