Blogs by Active Profile - Marketing, PR & Comms Agency

Do you have a handle on your marketing ROI?

Written by Nathan Selby | 14/08/20 10:10

Being able to identify your return on marketing spend has always been a pain point for business leaders. Too often, businesses throw money at a solution only to find themselves saying the same thing  they are spending £x but can’t actually attribute any of it to any particular activity. Those who can identify total leads generated, often find themselves questioning whether their return is a good investment. 

 

Marketers across all sectors are now scrambling around to associate a return on investment (ROI) to types of activity and spend. The obvious trackable activity is paid digital advertising – any credible platform has a reporting dashboard, which quite simply and clearly displays the metrics you need. But what about non-paid activity, like SEO, virtual events, webinars, organic social media and brand awareness activity generating website visits?  

 

With a considered approach, you can attribute costs to all digital, organic and most traditional marketing activities. It can be as simple as setting up goal conversions at relevant stages and tracking time and effort, as well as pay-per-click (PPC) spend across social media and search. 

 

When it comes to measuring metrics, you do not need to find yourself feeling overwhelmed. Here, we have identified some of the key ones that you should be interested in. 

 

Click-through rate (CTR) – the ratio by which everybody who has seen your content promoted or listed within their search engine results or feed, versus the number who have clicked through to the content itself. 

 

CTR (%) = Clicks ÷ Impressions x 100 

 

Cost per click (CPC) – the average cost per click, when considering the total activity spend. 

 

CPC = £Total spend ÷ Clicks

 

Cost per acquisition (CPA) – the average cost per conversion generated, when considering the total activity spend. Whilst CPS refers to acquisition, it typically related to initial lead generation, unless opportunity arises for an immediate exchange, i.e. purchasing something from an e-commerce store. 

 

CPA = £Total spend ÷ Conversions

 

Conversion rate – the percentage of those who clicked your ad that then went onto complete a pre-defined conversion value, i.e. download a report or complete a form. 

 

Conversion rate (%) = Total conversions ÷ Total clicks x 100 

 

Return on spend (Referred to as ROAS) – the revenue gained as a result of all marketing spend.  

 

ROAS = £Revenue ÷ £Total spend

 

Your ROI is only as accurate as your ability to track and interrogate data. Too often, we find that businesses have set up the wrong method of tracking, which results in recording too many – or too few – leads being associated to the correct method of activity. 

 

Too many businesses view leads generated as a total, rather than separating them out by lead source, campaign or ad group, which can make paid marketing campaigns seem a lot more successful than they are. 

 

Example:  
A SaaS business generates 20 leads at a total spend of £3,500. The average CPA across the campaign is £175 for a product that has an average annual subscription value of £750. Had the business paid attention to the campaign on an ad-by-ad basis, they would have identified that whilst the average CPA was £175, some leads were acquired from poorly performing ads, which cost the business in excess of £500 per lead. 

 

So, how do you get around the issue of spending too much on leads? 

 

Test and learn. Fail fast and optimise activity and campaigns. Most campaigns experience their highest cost per click and conversion within the first week or two, but by analysing the data available, as marketers, we can identify quick wins – the messaging, creative and calls to action that resonate with our intended audience. It's then by using that information – business intelligence – that we can optimise our campaigns and really make our budgets work harder. 

 

No campaign should involve assumptions – whether we have been engaging with this audience for days or decades, we should use our previous insights and understandings as a benchmark but test different messaging and creative routes. Habits are constantly evolving and as marketers, it's our responsibility to stay abreast of change. In a world where data is so accessible, it’s vital to campaign success that we use it. 

 

With a process in place to test and learn, the reality is predictable results, and a reduction in cost per conversion. 

 

So, it begs the question – having read all of the above, do you understand the ROI of each and every one of your marketing campaigns – or are you simply taking for granted the CPA based on the total conversion count? 

 

Let us help you get to the bottom of your metrics and into a position where you can predict your campaign ROI. Contact us for more information, or use the link below to apply for a digital marketing snapshot.