Building a digital campaign isn't the end of a marketer's hard work. Measuring performance is crucial to understanding value and future campaign decisions. Marketers and their leadership need to understand the cost of these campaigns relative to the value they bring in, particularly when compared to other digital campaigns.
No company wants to waste money on marketing strategies that don't pay off. Here's a simple guide to identifying the right metrics, measuring performance and making business decisions based on campaign ROI.
Understanding Your KPIs
The first step toward determining a campaign's value is understanding how to measure that value. This depends on the goals of the campaign. If your goal is driving high-volume reach, then traffic and exposure metrics will matter most. If the campaign needs to drive leads and conversions, then conversion ratios and other action-based metrics will be the focus of your measurement.
These metrics are your key performance indicator. As Smart Insights pointed out, analytics solutions like Google Analytics make it easy to customize your measurement according to various parameters, so marketers can focus their vision on the metrics that determine their ROI. Whether you're measuring according to referrals, website traffic, ad clicks or conversions, a good analytics solution will let you track this information — in real-time, in most cases — so that you can quantify the campaign's performance and assign numbers that reflect ROI.
Beating the Break-even Point
Once you have a sense of which KPIs best reflect a campaign's performance, you can use these metrics to quantify the success of the campaign. Again, some campaigns are easier to define through clear ROI than others: Research from HubSpot found that 46 percent of marketers consider proving ROI to be one of their biggest professional challenges.
But every marketing team must make their best effort to determine the return they receive on their spending. Use a combination of performance metrics and, where necessary, estimates of your results. Then contrast this ROI with the cost of the campaign. If the ROI doesn't cover the cost of the campaign, you'll need to go back to the drawing board to develop a strategy that will get better results. If you made more than you spent, congratulations: You generated positive returns for a campaign.
That isn't to say any campaign with positive ROI should be counted as a success. Balance the ROI of any given campaign against the projected ROI that could replace it. This includes reallocating the budget for the campaign to another, higher-performing approach. If one campaign delivers a net positive return of 10 percent on your spending, that's great — but if you have other campaigns generating net returns of 20 percent or more, then that 10 percent return is essentially costing money.
Determining the value of a digital campaign is a constant process. As you develop new strategies and campaigns that generate higher ROIs, choose to divert resources away from low-performing campaigns in favor of these more valuable strategies. In the end, find a balance between diversifying your digital campaigns and driving the highest ROI relative to your costs.