Digital Marketing: 6 Key Metrics to Measure Your ROI

[shammis606]

Social media and new technologies have become a good place to advertise and attract customers. At a low cost, targeted campaigns can be carried out or new commercial niches can be found.

But the important thing in any commercial action is not the some of the important considerations investment, but the comparison between the investment and the return received for it. This is where metrics come into play to measure ROI.

Before diving into these figures, it is necessary to clarify some concepts:

ROI (Return on Investment): is the tool to verify, in economic value, what amount of the investment was returned to the company.
Web analytics: is the analysis of data carried out on different social networks.
Conversion: is every time a user performs the action for which a campaign was launched.
We also link a glossary to answer the rest of the terms that will be used in this text.
To measure ROI, the first step is to be clear about the investment made, from there we can obtain a lot of information:

Conversion rate: is the percentage of users who perform an action on the website. Its formula is:

((Profit – investment) / investment)*100

Let's take, for example, a pharmacy that has decided to use its website to make home deliveries and thus increase its sales.

The initial investment was 1,000, and after analyzing it, it was determined that the income was 1,500 for the total number of shipments made. The calculation would be ((1500-1000) / 1000)*100= 50%.

In the example, a gain is verified since the result is positive.

Open rate: number of people who opened an email that was sent.

Returning to the previous example, this pharmacy, in addition to offering home delivery service, decided to create a newsletter to send to its customers monthly. To find out if the email generates interest, we must perform the following formula:

Total number of opened emails/number of sent emails (taking into account the campaign). Bounced emails are excluded.

This means that if 20 out of 100 emails sent were opened, you will get a 20% opening rate.

Time on site : This measurement tells us the time (on average) that a person browses the website. The formula to obtain this reference is:

The total sum of users' time on the website/number of page views.

At this point, it should be noted that what is being measured are those users who have performed some action on the website (changed pages, viewed a link) since if they have not performed any actions, it will be counted as a bounce rate.

Cost per click: Let's suppose that the pharmacy we are analyzing decided to advertise on search engines to attract customers.

To find out the average cost per click of the campaign, you must perform the following formula:

Cost invested/number of clicks received

Customer Acquisition Cost: This metric is used to know the real cost of a new customer.

In the case of the pharmacy, it will tell us whether the investment made has yielded positive results, or whether it needs to be adjusted. This metric should be compared between periods. The formula for this is:

Total amount of costs incurred/number of new customers.

This will tell you whether the cost has been higher or lower than the period it is being compared to and analyze the appropriateness.

Bounce rate: measures the number of people who enter the website and do not take any action on it or stay there for a short time. This will indicate that the content is not interesting to them , so it is time to make a change to it. Its formula is:

Total number of visitors viewing a single page / total number of visits.

These are some of the metrics that can be obtained by making good use of analytical tools in Digital Marketing.