Measuring ROI – Spend Your Marketing Dollars Wisely
Contrary to what many may assume, marketing is not purely a creative practice. Successful marketing campaigns rely heavily upon data to realize that favorable outcome; and one of the data points you need to understand is Return on Investment, or ROI.
ROI refers to the amount of money you earn as a result of an investment. Let’s look at an example:
- A divorce lawyer averages $10,000 in revenue per client.
- That lawyer spends $5,000 on Facebook ads, gains 10 promising leads, and signs 3 new clients, earning $30,000.
- ROI = Revenue gained from the marketing efforts – amount spent on advertising
- So, in this case, the lawyer’s ROI is approximately $25,000.
(ROI = $30,000 - $5,000)
To compare the effectiveness of a campaign to another, it is best to use percentages.
ROI % = [($30,000 - $5,000)] / $5,000] * 100
ROI % = 500%
In the example above, your marketing ROI is 500%. It is important to note that a negative percentage means that you lost money (you spent more on advertising than you earned).
Why is it important to track Marketing ROI?
Many businesses spend hundreds and even thousands of dollars on marketing campaigns without understanding what their money is actually getting them. You wouldn’t hand a salesperson $1,000 for a box without knowing what’s inside, right? But, if you’re not tracking the ROI of your campaigns, that’s pretty much what you’re doing.
Data-driven marketing is essential to running a successful business because it allows you to learn about the effectiveness of your campaigns and, subsequently, make informed decisions on your budget, as well as strategies that should be implemented going forward.
A Partner We Recommend for Measuring ROI
If you’re using Google Analytics or Facebook to track your ad spend, that’s a great start! But unfortunately, they will only show you interactions that occur within their networks. That’s why, at Zacaw, we recommend Wicked Reports for optimizing your ad spend, increasing your ROI, understanding your conversions, and analyzing the long-term impact of your ads.
Don’t settle for that mysterious box…it’s time to learn exactly what you are spending your hard-earned money on and what you can do to market your business more strategically. When you partner with Zacaw, we’ll handle the creative and the strategic side of things so that you can grow your business while enjoying peace of mind knowing that your marketing budget is being used wisely.