Many businesses believe that it’s impossible to properly and effectively track how your digital marketing efforts are working and what it’s delivering. While this may be true with traditional marketing, it’s actually possible to see exactly how many people are seeing your ad, who’s engaging and where they’re engaging through digital marketing reports.
You just need to know what to look out for and understand which activities are worth investing your budget in. Digital marketing should be a long-term strategy so it’s important to understand how it’s performing and how you can get the most from your budget.
What is return on investment (ROI) of digital marketing?
It’s exactly how it sounds! Managing the return on your investment of any digital marketing strategy. Monitoring ROI will allow you to see which of your ads or campaigns are performing the best and help to inform your future strategy.
It doesn’t matter whether you’re a small business or a large business, knowing exactly how effective your digital marketing spend is is crucial to success.
When your budget is low, you don’t want to be investing in activities that are not effective. Having a close understanding of your activities will help you to ensure that you’re getting the most out of your small budget.
For more information on measuring your digital marketing, read our blog: How long does it take for digital marketing to work for small businesses?
Why is it important to know how to measure digital marketing performance?
Knowing more about the return you’re getting from your digital marketing campaign will allow you to decide where to put your budget in the future.
If you’re not getting any return on investment from your digital marketing, it will show you where you can make changes. When you’re not getting a return, it can be tempting to cut digital marketing spend altogether.
However, sometimes it can take time to gain momentum on your campaigns and for them to deliver results. It can also take some tweaking and trialling different things before you find something that works perfectly for your business.
It can take up to three months to see an uplift, six months to start seeing some proper results and 12 months before you’re seeing a real return.
If you want to know more about when you can expect to see digital marketing results, read our blog: How long does it take for digital marketing to work for small businesses?
What metrics can you track to measure ROI?
Of course, the return you’re seeing in terms of profit from your digital marketing is one of the main metrics you’ll need to track. However, this doesn’t tell you everything you need to know. You might not see a huge uplift as a result of some digital marketing activities but it can still provide great marketing results and drive potential customers into the funnel so you can keep them engaged until they’re ready to but.
Here are some of the metrics we recommend tracking to measure the success of your campaigns:
- Average order value - this will tell you how much customers are spending per order on average. You might get more orders through digital marketing but increasing average order value can boost ROI too with customers spending more.
- Click through rate - this shows you how well your ads are performing and measures how often the people who see your ads are clicking through to your website.
- Conversion rate - this is the number of people who made a purchase in comparison to all of the people who clicked through to your website. It’s a good way to understand how well your ads are performing and whether your website needs any improvements to encourage people to purchase from you.
- Website traffic - you’re not necessarily going to make more money from more website traffic. However, an increase in traffic to your website indicates that your ads are working. If website traffic is up but purchases are down, it might mean you need to make a few tweaks to your website to make purchase easier. Plus, more traffic means a greater proportion of people coming to your site who might purchase from you. This is also a measure of your brand awareness as more people are becoming aware of who you are and what you do.
- Bounce rates - GA4 now calls this engagement rate but it’s similar. Visitors need to spend a certain amount of time on your site to count as engaged. If you find your engagement rate is low, we recommend looking at how your website is performing.
- Rankings - the relevant keywords your website ranks for is another sign that your website and SEO efforts are working. Getting into higher positions will help you to drive more traffic to your website and, as a result, drive more conversions.
- Number of leads - if your strategy is based around lead generation, tracking the number of leads driven is essential. A lead could be anything from a purchase to a newsletter sign up or a download of a brochure. Google Analytics allows you to track a conversion so you should be able to see this.
Tools for small businesses to track ROI
There are a number of tools available to you for no or little cost to your business that allow you to track your results and return on investment.
Google Analytics (or GA4)
Google Analytics is great for tracking a number of metrics and can help you to analyse which of your activities are working and which aren’t.
No matter your industry, you can track metrics such as:
- Traffic sources
- Page views
- Engagement rates
- Conversions
The tool allows you to understand where your website traffic is coming from, which pages are performing the best, and the demographics of the people who are visiting your website so you can refine your strategy.
Google Analytics is completely free - all you need to do is add a little bit of code in the backend of your website.
Hotjar
Hotjar is another great tool to help you understand what visitors are doing once they land on your site. If you’re driving a lot of traffic but your sales aren’t increasing, this is a good time to have a look at Hotjar.
The free plan should provide you with the information you need to start making changes to your website and increasing those all important conversions.
Ahrefs
Ahrefs is a paid tool but it’s well worth investing in. It’s an SEO tool that will show you what keywords your site is ranking for and in which positions. You’ll also be able to have a look at where your competitors are too so you can benchmark your website.
Google Search Console
Google Search Console can work alongside Google Analytics to help you understand what’s working well and what isn’t.
Again, it’s completely free and all you need to do is configure it on your site which a developer should be able to help you do. Or, if you’re working with a freelancer or agency, they should be able to help you too.
When I outsource digital marketing will I still be able to track ROI?
Yes, any good digital marketing freelancer or agency should be able to show you what you’re achieving through your spending with them.
Ideally, you should have a digital marketing dashboard that should show you the data that’s important to you and your business.
When you start working with someone, make sure you work closely with them so they understand which digital marketing metrics are most important to you and your business and the frequency with which you’d like to monitor them.
Learn more about the benefits of a digital marketing agency for small businesses.
What do we recommend?
When you make a start with digital marketing, or if you’ve tried it before, we recommend measuring a few key metrics to begin with. How about looking at increasing traffic to your website? You’re not going to start gaining conversions straight away, so measure the elements you can increase first and go from there.
Working with a third party will help with tracking and measuring ROI of your campaigns, too, because they should have a full understanding of what you’re trying to achieve and what you can expect to see when achieving it.
We offer two digital marketing packages. They’re based on results we’ve driven for small businesses like yours in the past. We’ve found a formula that works and we want as many small businesses to dip their toes into digital marketing as possible.
These packages will help you to get your strategy off the ground and start driving results for your business.
If you’d like a digital marketing package that works for you, take a look at our exclusive small business digital marketing packages.
