ROI (Return on Investment) is the indicator that has become more important in any online marketing campaign. Crowd advertising campaigns companies base their management from the beginning on constantly improving this variable.
Given the times that run the customers demand results of their investment, therefore for multitude of advertising agencies the ROI has become something essential to integrate it into any marketing strategy. We will show you how to calculate this indicator of profitability and the different ways of measuring it in any medium of promotion.
The calculation of actual ROI can become a complex process and on which it will be necessary to try to calculate each of the costs associated with the sale of a product or service, We will only consider the cost of advertising investment in this case. Google provides us with this ROI formula.
ROI = [Revenue generated by advertising – advertising cost (investment)] / advertising cost * 100%
Interpreting the percentage as an example if we made an investment of 1000 euros and obtained 5000 euros of profit, the ROI would be equal to (5000? 1000) / 1000 = 4%. That is, with a ROI of 4% we would be earning 400% of the money invested, therefore, of each euro invested we are obtaining 4 euros (discounted the cost of the investment). A ROI of 0% means that we generate the same amount of money that we invest in advertising. A 100% ROI will mean that the revenue will be twice the advertising spend invested. A negative result will indicate that we have invested more than the sales or business opportunities that have been obtained with the promotion.
Management of ROI
To carry out a correct control of this indicator we recommend the following actions:
Define the objectives and include them with value assigned in google analytics
The main thing to face any online advertising campaign is to define the objectives to achieve with it. There are different objectives that can be defined apart from online sales, such as applications received by contact form, downloads of catalogs or documents, visits to the contact pages or other actions that do not represent direct sales and of which only in A certain percentage will bring transactions, Reservations or sales through online media.
For these cases it would be necessary to know the average sales closing rate of each one of them, in such a way to estimate the unit value, that is to say, the contribution of a conversion defined as the form sent by client in a website.
As an example if for 5 forms received, we know that our closing rate is 20% and we know that the average purchase is 1,000 euros, our target should have a value of: 1/5 x 1000 = 200?, So we should add This value in the Google Analytics target setting.
Set the e-commerce code in google analytics
If we have an online store google offers us a powerful tool in analytics totally free, Which allows us to integrate the transactions of our electronic commerce with the google analytics platform.
When installing this code, we can know the% of e-commerce conversions with respect to visits, which products are the most and least sold, time spent on the web during the purchase, which sources contribute more orders or reservations, etc. Include Tracking conversions in google adwords and link counts with google analytics.
If we use a CPC campaign with google adwords it is easy to obtain this data we would have to enable conversion tracking and link adwords with analytics, with all this we will have all the data available to analyze the expenses and investment made in the campaigns and results obtained.
Measuring ROI in social networks Social media is an online media with a constant growth in advertising investment by companies, but how do we control ROI in these media? The companies are interested in knowing what return they have of their advertising investment in campaigns of Facebook, Twitter, Linkedin or Youtube. The number of followers who have each social profile can be one of the objectives that can be established to control the profitability of the investment along with others such as the traffic coming from these means.
Campaign tracking by URL
Google analytics offers another interesting tool to control how ROI works in each social network, is called URL builder and is nothing more than assigning each social network a personalized landing page, The tool automatically generates a custom url to control through analytics as the campaign goes on each social network.
Using QR Codes
Another way to measure ROI in social networks can be by using QR Codes. We publish for example discount bonuses in each of the social networks, we make 3 QR codes for each social network and each provides the discount code, to benefit from the discount the client must present the code. It is a simple and reliable way of measuring the profitability of the campaign.
We can use specific dates or times of days to make specific promotions, these will be published in social networks, the collection in that time slot or time interval will make it easy to calculate the ROI. These advertising actions are often called “hot time”. For example we can establish a Thursday and Friday promotion with 15% discount on all gourmet products in the store from 5 to 7 in the afternoon, the hashtag for twitter would be #horagourmet.
Creating a small survey every time a customer buys through the web can also help us in this task. We should only ask the customer how he / she met us and include the brand’s active social networks. This strategy could also be transferred to the offline medium if we had a business with physical headquarters.