What is Marketing ROI and why is it Important?

By Anthony Pollino| 3 Min Read | March 16, 2018
Increase Return on Investment | Manager Discusses Projects in Progress

Spend on marketing and digital marketing is on an upward trend. According to a Forrester forecast, digital media investment is expected to approach $120 Billion in the next five years. Does your marketing strategy deliver results? Is your marketing expenditure yielding returns? These are some of the pertinent questions that marketing managers seek to answer. A Marketing ROI analysis helps to answer these questions.

We live in a fast-paced digital world, and companies now more than ever are investing in a host of digital initiatives. This includes; Email marketing, PPC advertising, SEO, Social Media marketing, Radio and television. However, this broad array of digital initiatives complicates measuring and tracking the marketing ROI. Some important metrics to determine digital marketing ROI include;

  • Conversion rates
  • Click through rates
  • Engagements rates
  • Number of visitors

What is Marketing ROI?

Marketing ROI is the monetary return from a company’s marketing activities. It is also referred to as MROI or return on marketing investment (ROMI). It is used to measure the return of a firm’s overall marketing mix or that of a particular marketing program.

Some reasons why measuring and analyzing your ROI will set you apart from your competitors;

1. Formulating an efficient budget

Measuring and analyzing your marketing ROI allows you to formulate and sustain an efficient budget. Your ROI and all other marketing analytics provide a more focused and targeted outlook on your marketing efforts. You are able to determine which items in your budget need to be increased or decreased based on an analysis of your ROI.

2. Improving marketing strategy

Your ROI helps you determine which marketing strategies are performing well, and which ones need to be improved or done away with. It will help you determine which marketing investments are generating returns and which ones are not profitable. You are then able to determine where to channel more investment and what to cut off your overall strategy.

3. Gaining competitive advantage

Competitive advantage is what sets you apart from your competitors by offering greater value to customers. When you measure your ROI and use it to determine your competitive advantage and strengthen it to improve your brand, you are able to stay ahead of your competitors. This helps you surpass your competitors marketing initiatives.

4. Setting realistic goals and objectives

Evaluating your marketing analytics will help you determine how you can improve your brand. Measuring and analyzing your ROI enables you to improve your marketing strategies and plan ahead. Setting realistic and attainable goals based on the available marketing metrics helps you to shape your overall marketing strategy and continue growing your company.

Hubspot’s 2016 State of Inbound Report observes that 72% of the organizations that measured their marketing ROI had confidence in their marketing efforts, while only 28% of the organizations that did not measure their marketing ROI were comfortable with their marketing efforts. Measuring the ROI of your marketing strategy will help you continue evolving your strategy to exceed your customers’ expectations.

If you are looking to analyze your current marketing strategy or implement a new strategy, contact us today. We are hear to help you develop the tactics to keep you ahead.

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