How to Measure the ROI of Digital Advertising Campaigns

Advertising | |By: Janice Masters

Digital marketing is one of the most effective methods of modern-day advertising. Digital advertising has surpassed more traditional methods, with spending expected to reach around 1.29 billion in 2019.

Digital marketing is about more than what you spend, of course, but it is important to find out if you’re getting your money’s worth from your digital advertising. No matter your budget, you need to understand where you were successful and what you can improve in your efforts.

By continuously measuring your digital advertising ROI, you can use data to assess your advertising campaigns and decide if you’re achieving your goals.

Here’s how to do it.

Establish Clear Goals & Objectives

Before you can measure the ROI of your digital marketing campaign, you need to know precisely what you want to get out of the campaign. Common campaign goals include:

  • Increasing brand awareness
  • Launching a rebrand
  • Launching a new product or service
  • Attracting a new audience
  • Increasing traffic to your website and/or landing pages

Establishing clear goals and objectives for your advertising campaign will help you determine clear paths to achieving success.

ROI vs. ROAS

ROI (return on investment) has long been a reliable way to understand traditional advertising success, but ROAS (return on advertising spend) is particularly relevant for digital advertising. ROAS reveals the effectiveness of online advertising campaigns. You can find your ROAS by taking your ad spend and dividing it by revenue.

While ROI takes marketing as an investment to increase profits, ROAS considers marketing an essential cost of doing business.

Establish a Solid ROI

Once you have a solid understanding of your advertising goals, you need to decide the metrics you’ll use to measure your ROI.

Three useful metrics are:

  • Cost per click
  • Cost per acquisition
  • Cost per thousand ad impressions

These metrics are quantifiable and can be tracked online. This makes it easy to analyze your campaign and make improvements going forward.

Calculate Advertising ROI

Following your campaign, you can use data to calculate success. Calculate your ROI, starting with this simple formula:

ROI = (Gain from Investment – Cost of Investment)

To truly understand the gain from investment, you need to return to the metrics you decided to use, such as “cost per click” and “cost per acquisition.” This will help you see clearly how successful—or not so successful—your campaign was.

Using relevant, quality metrics will help you understand what worked for your campaign and what didn’t. This aspect is particularly useful for sorting through all of the digital advertising platforms and methods.

One final thought: Measuring your ROI and using it to make adjustments to your current and future campaigns will help you continue growing your ROI.

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