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The essence of marketing is to generate some return on investment (ROI). To measure your ROI, you will need to have a good grasp of your return on marketing investment (ROMI). The ROMI is an important marketing metric and it’s one of the Key Performance Indicators (KPIs) you should look out for.
In this guide, you will discover the return on marketing investment best practices. You will also discover how to measure your return on marketing investment in real-time.
Also known as the ROI of marketing, the ROMI measures the return on investment of the overall resources (or amount) a business puts into its marketing. The ROMI can be used to determine the returns generated from a single marketing program. It can also be used to evaluate the return gotten from the overall marketing mix of a company.
The ROMI showcases how well your Search Engine Optimization (SEO), blog, email, ads, and other marketing elements pay off. When calculating ROMI, only expenses are put into consideration. Other factors like payroll, rent, and production costs are not considered.
For instance, if a company typically averages 4% organic sales growth, and decides to run a $10,000 campaign the next month. Let’s say the company generates $15,000 by the end of the campaign, the ROMI will be:
Return on Marketing Investment = [($15,000 – $10,000) / $10,000)] x 100 = 50%
Some success indicators of ROMI are:
What are your marketing goals and business objectives? Your goals need to be SMART – specific, measurable, achievable, relevant, and time-bound.
Your key performance indicators (KPIs) must align with your marketing goals. Your preferred metrics should show how your marketing affects your customer acquisition, profitability, and revenue.
Some tracking mechanisms to consider are:
These tracking mechanisms will help you see how effective your marketing activities are. Attribution models help you identify how each marketing channel drives conversions.
Constant analysis of your campaign will help you pinpoint areas of improvement. You should consider testing various strategies, targeting options, messaging, and creatives. Optimizing all these elements helps you to boost your ROMI.
You need to segment your audience based on factors like interests, behaviors, and demographics. Tailor your marketing efforts to the audience segments that generate the most results for you.
What’s the lifetime value of acquiring (and retaining) your target audience? You should focus on nurturing customer relationships and loyalty. A healthy relationship with the customers translates to high customer lifetime value. This will, in turn, lead to an improved ROMI.
The right data analytic tool will help you make data-driven marketing decisions. Your decisions should be dependent on the data gathered from the customers, market trends, and the campaign.
A robust collaboration of the marketing and sales team is one sure way of maximizing the ROMI. There has to be effective communication between these two teams, and the goals have to be shared among the team members.
A/B tests various marketing elements like the ad copy, call-to-action buttons, and landing pages. This will help you determine the right mix of marketing elements that generates the most result for you.
Stay up-to-date with the recent happenings in the industry. You also need to keep a close eye on what your competitors are doing. Keep adapting your strategies to suit the market trends until you start generating your desired ROMI.
Here are steps to improving your return on marketing investment.
If you’re like most marketers, your core metrics are sales, leads, and traffic. Determining the effectiveness of your marketing message involves measuring metrics like:
If the bounce rate is low, or the conversion rate is high, then your marketing campaign must have been successful. Information obtained from your core metrics will help you refine your marketing campaign for improved performance.
Test multiple marketing channels to pinpoint the one that fits your business. Some common marketing channels to test are:
Experimenting helps you identify growth opportunities. You could try taking an action in a target group without taking the same action in a control group. Compare the results to figure out what’s working and what’s not. Results from your experiment will help you identify what to focus on and what to ignore.
A/B testing involves tweaking a campaign element and comparing the results with the previous campaign result. This way, you can easily identify what’s working and what’s not. When it comes to A/B testing, you should consider testing campaign elements like:
Serving your customers correctly involves knowing what they want. And that can be determined by asking them directly. Conduct a survey to understand what your customers are looking for. Tailor your marketing in such a way as to address their pain points.
Proper analysis of your spending and income will help you understand what you’re spending and the income that’s being generated. If your income is relatively low compared to the spending, then you will need to fix the anomaly.
One of the best ways of measuring your ROMI is by using analytic tools like the PPC Signal. Let’s say you’re monitoring metrics like clicks and conversions during your campaign, the PPC Signal tool can help you out.
With the tool, you can easily monitor these metrics by navigating to the dashboard. You can get started by clicking on “Metrics” and selecting clicks and conversions. After that, an image similar to the one below will be displayed on your screen.
A close look at the image will show you the anomaly between the clicks and conversions. You can see that an increase in clicks does not translate to a corresponding increase in conversions. As a marketer, your job is to figure out how to fix such an anomaly.
To get more information about such an anomaly, click on the “Explore” button.
The calculation is made by subtracting your marketing investment from the revenue you generate during the marketing. Divide your result by your marketing investment and multiply by 100. The answer is expressed as a percentage.
ROMI helps you assess the profitability and financial effectiveness of your marketing campaigns. This way, you will make informed decisions and optimize your campaign for improved performance.
The return on investment (ROI) measures the overall profitability of an investment. Return on marketing investment (ROMI), on the other hand, measures the returns gotten from your marketing activities.
The two methods used for improving marketing ROI are cost analysis and sales analysis.
Every business person is looking to generate some profits and returns. And that involves putting the right pieces in place to help you generate ROMI. ROMI helps business persons to:
However, running a profitable PPC campaign that generates the right returns involves using the right tracking tools. And one of the best tracking tools out there is the PPC Signal tool. The PPC Signal helps you keep a close eye on your campaign metrics. Since you’re looking to improve your ROMI, metrics to keep a close eye on are the conversion rate and bounce rate.
Now you know how to improve your return on marketing investment, what marketing pieces will you put in place during your next campaign?
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