5 Tips to Improve Digital Marketing ROI: Key Metrics

Digital marketing ROI (return on investment) is the ultimate goal of any business. Yet, many small businesses (and larger ones, as well) fail within the first year and by the end of five years, many have gone out of business, as you can see in the graphic below. Even though the graphic doesn’t list poor return on investment as a major factor in these failures, when a business doesn’t succeed, the ultimate culprit is poor ROI. So how do you improve digital marketing ROI? Read on to find out.

What is ROI?

As mentioned, ROI is an acronym for return on investment. You can calculate ROI using this formula:

ROI = (net profit – investment cost) / investment cost × 100

Many small businesses calculate ROI on a quarterly or annual basis, but you gain much more valuable insights by calculating ROI on individual campaigns, products, and tactics. Thus, calculating the digital marketing ROI provides a means to assess the performance of your digital marketing tactics. You might further divide your digital marketing ROI across different marketing channels (such as email, social media, and website), or even more nuanced insights come when you look at ROI by product or customer segment.

Once you have some ROI calculations, you can use them to benchmark against other firms in your industry or in your geographical area. In this post, we want to discuss using digital marketing ROI as a tool for making data-driven decisions that improve ROI over time.

Why do firms produce poor ROI numbers?

Your firm might experience poor digital marketing ROI for any number of reasons. Here are just a few:

1. Economic factors, such as low consumer confidence, recession, or tariffs
2. Increased competition
3. The cost of regulator compliance
4. Poor planning or execution
5. Decision-making based on political or psychological pressures rather than data
6. Poor customer experience
7. Poor branding leading to no sustainable competitive advantage
8. High cost structure
9. Human factors, such as low employee morale, a lack of innovation, and high employee conflict
10. A focus on short-term rather than long-term strategies

How to improve digital marketing ROI

Obviously, from the title of this post, you already know that my answer to how to improve digital marketing ROI (or the ROI from any of your marketing or operational strategies) is to analyze available data to find opportunities, cut waste, and improve efficiencies. So, let’s dive into the subject in earnest.

In the earlier section, I identified 10 reasons why your ROI might not meet expectations. Likely, there are a number of others that didn’t occur to me as I was writing this post. The first step in improving ROI is to figure out which of these (or which combination of them) contributes to your poor performance because your strategy for improving ROI depends to a large extent on what factors are causing you to miss expectations. Only then are you in a position to develop strategies that improve ROI.

1. Measure, monitor, improve

Well, first you need to know 2 things:

1. Your current ROI
2. Digital actions that contribute to ROI — and here you need to consider the entire scope of customer engagement with your brand — from awareness, through conversion, to loyalty (and maybe advocacy). Check out this great image showing how businesses generate ROI from their digital efforts.
   

Once you have this information, set up a dashboard in Google Analytics or whatever platform you use to monitor key metrics related to business performance. GA4, Google’s newest analytics platform, integrates Google Ads as well as the Google Play Store into your reports to provide a richer analysis of key performance data. At a minimum, your dashboard should contain:

• visits (sessions)
• time on page
• engagement with each social platform — shares, likes, comments, RT
• page value from multichannel attribution modeling
• AOV (average order value)
• Conversion
• Cart abandonment rate
• loyalty (percentage of visits with 1, 2, 3, … prior visits)
• Page exits from landing pages

Next, add social media data from your platforms or from the marketing automation tools you employ, such as Buffer or HubSpot. Finally, add email marketing data. A tool like Cognos, from IBM, allows you to bring data from these various sources together in one place, which makes analysis richer and more meaningful. Use a tool such as Tableau to create an interactive data visualization for these key metrics, as it’s much easier to interpret your data and derive insights when you view data this way.

You should also create reports for these metrics based on platform (ie, organic, social platform, direct …), key demographics and geographics of interest to your brand, age, gender, and, if they’re valuable, interest categories.

Now, run your dashboard at least once a week. Periodically, say every quarter, compare performance with performance in prior quarters. Try viewing the data longitudinally to gain more insights.

2. Optimize content marketing strategies

In the digital world, content is king, but context is queen with the increased use of AI snippets that answer users’ questions without requiring them to click on a link.

Translated, that means you need to create valuable content on a consistent basis — at least once a week on your website, daily on most social media platforms, and at least once a month via your email newsletter, according to the graphic below.

Here are some action items to help optimize your content marketing:

• Start with a content marketing calendar to keep you on track to produce quality content on schedule. Check out the link to get some great templates to get you started.
• Share content across social platforms — Buffer recommends sharing each piece of content multiple times across each platform, and I posted their schedule here, along with some other great content marketing advice. However, since organic reach is declining as platforms seek more revenue through paid advertising, reposting multiple times has little effect. Instead, focus your social media content on building a relationship with your online community.
• Monitor the performance of your content and sharing tactics. Then, use metrics to guide the creation of better content.
• Use a variety of content types—video, images, text.
• Create content tailored to each stage of the conversion process identified in the graphic above.
• Don’t rely on AI content, as it’s often wrong, incomplete, in violation of copyrights, or duplicate content.

3. SEO

Search engine optimization (SEO) ensures you get the most value for your content, and I’m often surprised by how few bloggers really understand how to do good SEO or even understand the importance of SEO for reaching their ROI goals. I think that’s because, pre-Panda, it was your developers who controlled SEO, but now it’s your content marketers and others involved in your digital marketing.

Here’s a crash course on SEO:

• Select keywords [actually keyword phrases] that match search terms for your target audience. Use Keyword Planner, a free Google tool within their advertising platform. Look for keywords, you’ll need 20+, that have high search traffic and low competition. There’s no magic formula here, just try to balance out these two criteria.
• Use keywords liberally throughout your site and in your content — beware of keyword stuffing.
• Install, or have your developer install, a good SEO plugin for your blog. I use Rank Math SEO Plugin, but I’ve also heard good things about the All-in-One SEO Plugin. I used to use the Yoast plugin, but it stopped sending updated content to Google, which tanked my SEO for a while.
• Work to get authentic backlinks to your content. Use the link to get ideas on how to generate backlinks.
• Build engagement on your social networks.
• Rinse and repeat.

SEO still works, but GEO (generative engine optimization) has opened new opportunities by helping brands get their names out to their target market by showing up in AI-generated snippets that many users prefer to clicking links.

4. Know the facts about what works

Notice the high ROI from email marketing, although several marketing tactics seem to be missing from this graph. I suspect some, like content marketing, have such wide effects on ROI that their value couldn’t be adequately captured as distinct from SEO.

Now, you might argue that email marketing isn’t proper digital marketing, but you’d be wrong.

This means your digital strategy MUST include ways to build an email list of subscribers as well as a means to energize that list with periodic emails designed for their particular stage in the buying process.

So, bite the bullet, find yourself a good email client (I use AWeber, but Constant Contact is also good), develop premium content, like ebooks, to drive subscriptions, and develop a strategy for sending unique branded content to subscribers.

5. Remember, digital is still marketing

Doing everything digital perfectly is great, but remember, digital marketing is still, first and foremost, marketing, and you can’t sell an overpriced, crappy product with poor customer service. Promotion is still only ONE of the 4 Ps. Digital marketing is but one part of the marketing ecosystem that requires constant attention to every aspect of the system identified in the infographic below.

Digital marketing ROI depends on your ability to do all of marketing well, not just promoting your brand on digital platforms. That means you need:

• A clearly defined target market
• A USP (unique selling proposition)
• Strong branding
• Excellent customer service
• High-quality products and services
• A competitive price that provides value
• The ability to manage the customer journey effectively
• Good channels of distribution
• and, much more

Conclusion

Improving your digital marketing ROI won’t happen overnight. You’ll likely spend time generating and analyzing data from all your digital marketing efforts, then making tweaks to your existing strategy. Once you have sufficient data, along with some A/B testing and experiments aimed at improving your ROI, you’re ready to develop a new digital marketing strategy that consistently delivers a high ROI.

Let me know how your journey goes by leaving a comment below. Good luck.

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