Digital Marketing - The Hunt for ROI
Proof of ROI is the question we receive the most at Minnesota Social, and for obvious reasons. People want to be able to measure just how much their marketing dollars are growing their business. That is their entire purpose after all. Believe us when we say we certainly understand this and wish there was some magical formula we could plug your number into that could show our results. The problem is…that just doesn’t exist. There have been studies that show guidelines and benchmarks, but the problem with showing an accurate ROI on a case-by-case basis proves to be difficult for the following reasons:
1. Digital marketing has benchmarks that are used, but they are far from perfect. Clicks, landing page conversions, and close rates differ from location to location. What might work for one business, doesn’t necessarily work for another.
2. A large part of reporting ROI falls back on you. We need to know things like lifetime customer value, what the average customer spends, and what your margins are. All that requires you to track analytics in a way that we just don’t have access to. Your willingness and/or your ability to do so, is usually where this conversation hits a massive speed bump.
3. Key Performance Indicators (KPIs) are different for each business. Do you sell products or services? Are you trying to generate revenue? Are you trying to create awareness or loyalty? Or are you simply just trying to showcase your personality to your client base? All of these are different priorities for certain businesses. Some of our clients have expressed brand marketing as being more important than money in their pocket. Obviously the goal is both, but prioritization of an individual goal can sidetrack maximization of ROI.
4. On our side, we only see qualitative, not quantitative results. Shares, likes, and comments are great because they show that people are enjoying the content enough to do something about it. They in no way indicate what happens next. Are they actually coming to your store and buying something or just interacting with your page? They are indicators of profit, but not to the point where you can count them as such.
5. What is your time worth? Many people value the amount of time they save as a key contributor to their ROI. Studies have shown that the average business owner spends about 60 hours a month running a functional social media marketing campaign. Is your time more valuable spending it on other things? Finding out your own ROI helps many business owners establish what they can do to maximize their worth.
Calculating ROI is not impossible. Many places have become creative with special promotions that they only offer on social media. They use things like promo codes and deals that they only offer on their social media channels similar to a coupon code. They run part-time promotions and social media giveaways to determine the reach they are achieving. They then usually stack up against their social media marketing reach against other forms of marketing they are doing to determine efficiency.
A study from Marketing Profs said that you should expect the following ROI for every marketing dollar spent on the following channels:
E-Mail - $38
Paid Search - $22
Social Media - $13
Mobile - $11
Print/Catalog - $7
Radio/Television Ads - $6
The United States Small Business Bureau says that small business owners should invest 10% of all revenue back into their marketing. So it’s just a matter of deciding where you want to invest those dollars to get the best “bang for your buck.”
At Minnesota Social, we believe that any form of marketing is better than no marketing at all. The reason we have chosen to specialize in email, paid search, and social media marketing because the studies have shown those are the most effective. We help our clients build up their customer base and have people opt-in to receiving marketing emails. We work with our clients by building up their social media following organically, to supplement the paid search/ads.