Digital Marketing And Return On Investments (ROI) Definitions

The digital age is full of data, proving the power of digital marketing in building brands, attracting, generating potential customers, and increasing sales.

Whenever a company starts a digital marketing campaign, it invests considerable effort and money into it and naturally it wants a return on its investment (ROI).

The success of the likes of a book marketing campaign can be measured with the help of tools like an online ROI calculator. The effectiveness and impact of digital marketing strategies will also help you identify gaps between different strategies, which can be investigated to improve future campaigns. 

Unfortunately, measuring the success of digital marketing campaigns is a highly disputable topic because there is no single specific method to calculate return on investment.

But to help you have the best chance possible, let’s look at some crucial definitions.

digital marketing definitions
Essential Digital Marketing Definitions

Important Metrics And Definitions For Digital Marketing

Here are some key digital marketing definitions, as well as those relating to ROI. 

Cost Per Lead: This metric depicts how much it costs to generate every lead.

Cost Per Acquisition: To learn how much you spend to acquire users, not leads, cost per acquisition is the indicator you’ll want to look for. It is calculated by dividing your total marketing investment by the number of acquired clients.

Return on Ad Spend: This indicator looks at the profit made through the ads and the total amount spent on creating the ad. It is calculated with a CPC calculator which divides the income by the total ad spend, then multiply by 100.

Average Order Value: Businesses offering services, E-commerce, and B2B will find these metrics useful. This indicator lets you know the value of every visitor’s purchase every time they purchase.

Customer Lifetime Value: How precious are your clients? The user’s lifetime value can answer this particular question. While these metrics can be useful for any business, e-commerce businesses will especially find this number with the help of an online calculator.

Lead-to-Close Ratio: The lead-to-close ratio can be calculated with an online ROI calculator which divides the given number of leads by the number of leads that ended. This ratio can describe the quality of the guide your marketing team hands over to the sales team as well as how successful your sales team was at closing leads. These metrics can assists you determine your digital marketing ROI through this formula:

Projected ROI = [(LTV – COGS – CAC) / (CAC + COGS)]*100

Where

CAC = customer acquisition cost

LTCR = lead to close ratio

CPL = cost per lead

COGS = cost of goods sold

Branded Search Lift: These metrics look at how many individuals searched particularly for your product. This ratio will enhance over time as your item becomes more recognizable and established. Branded search lift is a great indicator to use when measuring the surge of awareness for your product.

Average Position: The positioning of your site in search results can make an important variation on how much traffic your site receives. This indicator calculates your search page ranking for your focused keywords with an online calculator. Also, Google Analytics can find this ranking for organic search. The higher ranking, the more clicks, and ROI to your site, which translate into a higher return on investment.

Non-Brand CTR: Did you get visitors to your site without marketing your product? CTR calculator will provide you insights into how well SEO strategies performed. Also, Google Search Console can determine this ratio.

In traditional marketing, return on investment was only calculated by the surge of revenue and sales of a particular marketing piece, strategy, or campaign generated. Firms didn’t bother generating a system to analyze the results of their internet marketing efforts. If sales skyrocketed, industries would repeat their efforts without any improvements.

Conversely, when sales dropped, digital marketing managers would pause what they were trying and do something else.

 

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