What is the importance of ROI in online marketing?

The ROI allows you to determine how successful your online marketing campaign has been. By creating a strategy, you aim to attract as many interested parties as possible, increase sales and boost your visibility. You want to receive leads and benefit from the campaign in the long term. To find out whether this has worked, the ROI - the return on investment - is calculated.

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What is the importance of ROI in online marketing? ROI is the return on investment and a key performance indicator for companies. It clearly shows the relationship between the investment in an online marketing campaign and the resulting turnover. It is a relevant key figure for further marketing activities.

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ROI is often also referred to as marketing return on investment. This key figure allows you to determine whether you have achieved the goals you set with your online campaign. First and foremost, it is about an increase in sales. The ROI therefore makes it clear whether your expenditure is in good proportion to your income from the campaign. It is also often used as a business management indicator. However, it is also relevant for recognizing the success of advertising campaigns. Let's take a closer look at the topic.

The calculation of ROI in online marketing

In order to be able to use the return on investment effectively for you, a calculation is necessary. You can choose from two options here:

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1. Calculate the cost ratio

With this method, you use the cost ratio as the basis. It is a simple calculation. Here you can see whether your online marketing measure has a good efficiency ratio. The formula for the calculation is:

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Turnover / investment = cost ratio

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There are of course recommendations as to where the cost ratio should be. It is generally stated that you should achieve a ratio of at least 5:1. This means that you receive a turnover of five euros for an investment of one euro. In this case, the ROI would be 400 percent.

The higher the ROI, the better it is, of course. With a ratio of 11:1, you have an ROI of 1,000 percent.

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Important: This is about turnover, not the profit made.

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2. Calculate the sales allocation

Calculating the ROI in relation to the sales allocation is also a promising way of gaining an overview. Here you can perform the allocation either directly or indirectly. If you opt for indirect allocation, you take all revenue from your last touchpoints. With direct allocation, you proceed contact point by contact point.

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So what exactly does that mean? Ideally, you want to obtain leads with an online marketing measure. Leads are initially just the contact information of interested parties. The next step is to contact the lead. You make contact with the interested parties. The question now is whether the contact will result in a purchase. Every communication with the prospect is a contact point. The fewer contact points you need, the better.

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At MORE, we like to recommend that our customers determine the ROI in the context of the cost ratio. This gives you a quick overview and lets you know whether you have been successful. However, if the ROI still leaves something to be desired, it makes sense to work with the revenue allocation for the capital employed.

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Do I really need the ROI?

It is understandable that you are wondering whether the calculation is really necessary. After all, you need to gather some information first. You need the exact campaign costs and need to find out how many leads you have generated and how many of them you have actually closed.

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If you want to compile the ROI for product sales, the following information is required:

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• Costs of the campaign

• Sales of a product before the campaign

• Sales of a product after the campaign

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But even if it seems like it takes a lot of time to calculate, we recommend that you invest this time, as it is an important key figure for your economic success. At MORE, we know that ROI is particularly important in the context of further online marketing strategy and for future campaigns. That is why we are happy to compile this key figure for you.

Increase ROI in online marketing

Of course, it is good when an online marketing campaign works so well that an optimal ROI is immediately apparent. The following points are important in order to achieve this within a certain period of time:

#1 Definition of the target group

The basis for a successful campaign is the target group. As one of the first steps, it is important that you put together a precise definition. In addition to the desire to reach as many potential customers as possible, we recommend that less is more. The clearer your target group is defined, the better you can tailor the campaign. Targeted communication is the magic word for a successful customer journey.

#2 Use inbound marketing

The cost-per-lead is a major cost factor in relation to your ROI. If you can already reduce this, it will also have a positive effect on your return on investment. At MORE, we have an insider tip for you: focus on inbound online marketing. These are potential customers who have already developed an interest in your products.

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Inbound online marketing is a comprehensive field and therefore it is always an advantage if you have experts at your side, like our employees at MORE.

#3 Online marketing campaigns with a long duration

Companies often associate marketing campaigns with a short duration. In fact, there are some successful examples where the campaign came out of nowhere, so to speak, and quickly disappeared again. In many cases, this approach is an excellent way to increase ROI. At the same time, however, it is also advisable to keep an eye on long-term online marketing.

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Not every prospective customer decides to buy products quickly. In fact, purchase decisions are often thought through for quite a long time. Campaigns with a longer duration have the advantage that you will always be remembered by interested parties. This has a positive impact on ROI.

#4 Create content with a long lifespan

We have already mentioned that it is good to think long-term. This also applies to the content of your marketing. Creating content is an important cost factor and the time it takes should not be underestimated. So it's all the better if you can use the content in the long term. Visibility in search engines plays an important role in online marketing. You can therefore achieve a high ROI if you create permanent content as part of your campaign. This works via a blog or a series of guides or interviews on social media. This will also generate a lot of organic traffic. We at MORE will be happy to advise you on this topic.

What you can determine with the ROI

The return on investment is a popular key figure because it provides you with so much information. The profitability of online marketing is important for your long-term success and sales growth. With tangible figures, you can see what is working well and where there is still room for optimization.

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We also recommend that you compare the ROI of a current campaign with the ROI of a completed campaign. This will allow you to recognize possible differences that can be attributed to changes in the form of the campaign. Compare the following points:

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• Differences between the current and previous campaign

• Reviews of the last and current campaign on social media

• Time at which you lost the interested parties 

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The ROI also helps you to recognize how competent your online marketing is, which measures work particularly well and which online channels are well received. This gives you further adjustments that you can make without incurring excessive additional costs.

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Key figures as a supplement to return on investment

Key figures are generally an important point for monitoring the efficiency of online marketing. ROI is not the only key figure that we at MORE use for our clients. Many external marketing agencies only use turnover as a key figure for the success of your online marketing campaign.

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However, we at MORE are convinced that the use of various key figures gives you a comprehensive insight into where things are going well and where there is still room for improvement.

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We therefore also calculate the following key figures for our customers:

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1. Landing page conversion

How many visitors come to your website through the campaign? How many of them decide to make a purchase? This is where the quality of the campaign becomes clear.

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2. Increase in sales

Of course, we also use the increase in sales as a key figure. It helps us to recognize, especially in the short term, whether this campaign is comparable with previous campaigns in terms of success - also in comparison with the capital invested.

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3. Amount of leads

Leads are not yet sales, but they are a good basis for them. We therefore check how many leads you were able to generate for your company through the online marketing campaign.

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4. Social Media

Online marketing depends on the use of social media, among other things. Key figures such as the increase in followers, likes, interactions and conversions are therefore helpful for assessing your campaign.

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Conclusion: ROI is indispensable in online marketing

No company likes to implement online marketing campaigns without knowing how well they work. Of course, you can invest in various campaigns and hope that they work. However, marketing ROI can only be improved in the long term if you also know where your campaigns are working and where there is still potential for improvement.

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With ROI, you determine how much revenue you generate with every euro you invest in online marketing. At MORE, we think this is an important aspect to find out whether you have achieved your objectives and where you can still improve your campaigns.

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Benefit from the knowledge of our experts and let MORE advise you on how to achieve the best ROI in online marketing.

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