In the bad days, digital marketing was a free-for-all where instant gurus touted their money-making formulas and deluded followers into spending thousands for coaching programs that didn’t work.
Now, of course, digital marketing is much sophisticated and it’s harder for false gurus to seduce business owners without proving ROI resulting from their digital marketing programs.
The info graphic shows the various elements necessary to achieve positive ROI of digital marketing campaigns. Basically, 2 things account for positive ROI:
- Bringing more visitors to a store
- Convert more visitors who shows up at a store
Unfortunately, many attempts to measure the ROI of digital media focus on these end results, totally ignoring the variety of factors that generate positive outcomes – a very dangerous practice.
Here are some tips in measuring ROI in digital marketing
Tip # 1: Think beyond outcome measures
First power tip for measuring the ROI of digital marketing understands the complex set of activities and interrelationships among activities in positive ROI. For instance, a focus on building a social media community backfires quickly if it has problems with customer satisfaction due to poor product performance.
Tip #2: Measure what matters, not what’s easy
First, set clear goals in digital marketing campaign- goals that go deeper than just outcome performance measures, then, create KPIs (key performance indicators) related to those goals.
Tip #3: Metrics aren’t enough
Don’t simply create dashboards with displaying your metrics. Statistics don’t speak for themselves and require interpretation by skilled analysts combining both the art and science of analytics to uncover actionable insights from a metrics.
A good dashboard allows users to dive deeper or takes a broader overview of metrics. Also, adding the ability for users to create ad hoc reports and alternative visualizations increases the effectiveness of your dashboard.
Tip #4: Tie compensation to metrics
One of the biggest challenges firms’ faces (once they get over the hurdle of generating meaningful metrics) is translating data into insights then applying those insights to actions. So, it’s a good idea to tie compensation to metrics—this ensures your employees pay close attention to metrics and try to optimize by using insights provided through these metrics.
Tip #5: Don’t stop with descriptive analytics
Move past descriptive analytics how many, how much, how often) to employ predictive analytics.
In essence, predictive analytics build models using big data to uncover relationships among the factors that impact the ROI of digital marketing (or any other variable of interest).