Return on investment (ROI) in advertising has been notoriously difficult to measure, whether it was the effective reach of newspaper ads, billboards and TV spots or the value of leaflets and promotional events. ROI has been on my mind for some time, and today I would like to discuss some of the ways to measure traditional offline advertising. Then, you can read more about some of the new methods and tools our in-house experts use to help clients make online marketing decisions.
Measuring ROI the Old Way
In business school, students are often taught to calculate ROI by subtracting the cost of marketing from the value of the returns based on their goals. Those can be brand awareness, an increase in sales, new customers or even client retention. Then, that dollar figure is divided by the marketing cost and the answer is the ROI percentage.
There are a few problems with this approach, as explained in depth in this research paper by David Reibstein, an esteemed professor at the Wharton School at the University of Pennsylvania. First, the numbers for effective reach are reported in many different ways based on the advertising medium. Second, it can be inaccurate to measure based on single campaigns, because efforts such as mailers could work alongside other campaigns such as TV or radio spots. It can also be difficult to measure returns because some metrics, such as customer retention, are quite nearly unquantifiable.
New Tools and Methods for Digital Marketing
Starting with free tools such as Google Analytics and Webmaster Tools and digging deeper with proprietary tools such as the ones we use at Online Image® have changed the ROI landscape completely (though comparing campaigns can still be a challenge).
Now, it’s possible to track your exact reach and compare it to the spend and compare those efforts to how often people click on your ad or site and even how often customers make purchases or call your business. With the right skills, you can do these using free, but complicated, tools from Google.
At our company, we have developed proprietary tools to make these metrics easy to understand. For example, we have the ability to crawl search engine results pages for the terms your business is targeting, and we report these figures and create ranking graphs for each client every few days.
In addition, our tools can help you easily see the listings your company is getting on hundreds of directoryFor Internet marketing purposes, directories are sites that aggregate the contact information and ratings of multiple businesses. These can be general, like an old phonebook, or specific, such as a site that shows all the practicing lawyers in a specific area. sites, all the reviews you’re getting from customers, and the number of times customers have found your site and then called you. We also create a highlights section that shows your most important metrics with just a glance.
All of this means that you can accurately track online ROI by comparing those figures to the bottom-line goals you have for your company, and you can achieve better ROI than ever before. With the advent of online marketing, the value of your ad spending has increased exponentially. If you would like to know even more about how accurate your advertising ROI can be, I invite you to give our team a call at 801-261-5700 or shoot us an email using our contact form.