How to measure your return on investment from digital marketing

How do you calculate the return on investment……simple formula!

ROI = (gain from investment –  cost of investment) /     cost of investment

(Where ROI is the return on investment)

In the above formula gains from investment, refers to the proceeds obtained from selling the investment of interest. Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.

If you have chosen digital marketing as an avenue to create awareness for what you deal in you might want to gauge the returns in terms of how digital marketing is working for you. If the amount you spend on digital marketing is lower than what you get in terms of returns, then you could consider scraping the move as un-viable.

Measuring your return on investment on digital marketing is one complicated affair; this means that you have to collect social media data, in terms of clicks on posts and or hits from the social media users. This alone is challenging enough because it doesn’t provide reliable ROI assessments.

Social media has four paramount primary functions, to monitor, respond to, amplify and shape customer behavior, the four functions can be traced to “decision making” or what customers follow before they actually make a purchase. Being able to identify exactly how,  when, and where social media influences consumers at each stage can enable executives to craft marketing strategies that tap into social media’s unique ability to engage with customers.

The return on investment measure via digital marketing is implemented using Social media GRP.

Social media GRPs is a metric based on the number and reach of company-related postings across social media. Which is among others Facebook, twitter or blogs  It serves as marketing mix model input to determine the impact of social media on business performance. Various sources provide the information needed: from monitoring of social media panel data to platform-specific tools such as Facebook Insights. Social media insights will help determine just how many people have interacted on any post that was poised as marketing. Compared with classic GRP data, social media GRPs have a critical added dimension: sentiment. they have feelings attached , social media postings can also be negative, making it necessary to differentiate between negative, neutral, and positive social media GRPs.

By using social media GRPs, marketers can integrate social media into their marketing mix models to determine its effect on sales and profits. Marketing mix models also enable teams to develop response curves—akin to the ones used for traditional media—to optimize their marketing mix based on expected returns.

Which factors determine company performance in social media? Marketers can answer this question by using an approach that systematically analyzes buzz and identifies its key underlying drivers. The buzz monitoring approach addresses central consumer interaction questions and—since it is central to the “monitor” stage—is the premise for responding to, amplifying, and leading consumer behavior. When in the buying process do users voice their opinions—before acquiring the product or afterwards? What are the dominant themes—the product, service, or the price? And where does the discussion take place—in forums, on Facebook, or in blogs?

Any other metrics you would like to add?


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