Monday, October 15, 2018
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How To Calculate Digital Marketing ROI

Digital marketing has surpassed more traditional forms of marketing in reach and dynamics. Australia is no exception to this. With an estimated 88% of the total 2018 population having internet access, the Australian market is ripe. Here are the key factors to consider when calculating digital marketing ROI;

i. Marketing costs and closing rate.
The aim of marketing is to make sales. The cost of putting out an online lead should be less than the value of asale. The ratio of leads put out to actual sales should be low. Digital marketing should be well-tailored to optimize turnover. These two variables give the Cost per Online Acquisition. This is the total cost of making a sale, including digital advertising, customer engagement, and product delivery costs.  A good Digital Marketing Agency in Australia will be able to break down your spend & give you an accurate idea of where your marketing budget is going.

ii. Click-through rates.
Related online pages such as blogs, landing pages or sponsored sites should have a high conversion rate. This is called the click-through rate. Directed traffic to the main site may increase revenue without an increase in advertising costs.

iii. Long-term customer value.
One-off sales income should cover the Cost per Online Acquisition. The greater aim of digital marketing is to make a repeated conversion of a base lead. As such, the value of a customer should be taken into consideration in the short and long-term.

iv. Median Order Value.
This is an average of total sales generated from digital marketing. It gives a more stable estimate of ROI by eliminating outliers.

v. Type differentiated conversion rates.
Digital marketing is delivered on various channels and platforms; e-mails, social media, referrals, direct delivery or organic searches based on mobiles, tablets, PCs or mass media. Identifying which type has the most hits, coupled with high conversion rates identifies the most profitable routes and the weaknesses.

vi. The branding effect.
Known brands convert more than lesser known brands. This means digital marketing ROI can be optimized by biased resource allocation.

In conclusion, ROI on digital marketing is very dynamic and should ideally be evaluated on a yearly basis. This gives a more comprehensive picture of the revenue generated. Taking into account the aforementioned factors will enable you to effectively calculate digital marketing ROI.

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