ROI in digital marketing: How to measure your campaign success | The Northern Daily Leader

With the dramatic rise in digital marketing how can you measure if your own strategy is cutting through and achieving the results you’re aiming for? Picture Shutterstock

Digital marketing is huge in Australia. It’s so big that a report by the Interactive Advertising Bureau (IAB) Australia last year stated that it contributed over four per cent or AUD$94 billion to the country’s gross domestic product (GDP). To put that into perspective, the agriculture sector’s contribution to the GDP has remained slightly over two per cent over the past decade.

The report also stated that related investments in 2021 led to a total consumer benefit value of AUD$55.5 billion, two-thirds of which are from reduced transaction costs. That same year, the digital marketing sector reached almost AUD$13 billion; the year after, it earned almost another billion. Advertising mediums that posted slow growth in years past rebounded by a huge margin.

While the growth is clearly attributable to businesses making up for time lost due to the COVID pandemic, digital marketing has been on an upward trend since the early 2000s. This trend alone is indicative of the billions that businesses have spent in exchange for enhancing brand exposure and, more importantly, revenue generation.

Regardless, an important thought remains: ‘Are you harnessing digital marketing properly?’ It’s easy to see if your efforts are bearing fruit by looking at the return on investment (ROI). Here’s a look into this measure of success, the metrics involved, and a few ways to improve it.

ROI at a glance

ROI measures the profit earned relative to the amount spent on something – in this case, digital marketing campaigns. Naturally, your business should earn a few dollars for every dollar spent on running the campaign. ROI that doesn’t result in a profit means the campaign didn’t achieve its intended purpose.

Many digital marketing professionals like Pursuit Digital Agency focus on ROI more than other metrics because it’s simple to calculate yet accurate for measuring success. ROI even applies to daily life, as in purchasing a product or service and hoping it will last long enough to break even. It gives business owners an idea of what works and what doesn’t.

However, ROI isn’t as effective in making comparisons. The value for one investment over the span of a year can’t be compared to that of another over, say, three years. Common workarounds include getting the yearly average or using other metrics, such as the rate of return or net present value. In this case, business owners should compare ROI to other metrics to paint a clear picture.

What’s a good ROI?

Short answer: there’s no magic number.

Long answer: the internet is rife with approximate values from industry experts, but that’s just it – they’re approximate. Industries vary too much to stick to a fixed number. For example, the average ROI for non-cyclical consumer goods (i.e., basic needs) is around 5.5 per cent, whereas the ROI for discretionary consumer goods (e.g., electronics) is roughly twice as much.

As a rule of thumb, businesses selling consumer goods in general can aim for a double-digit ROI as a start. Meanwhile, those in other industries shouldn’t discount aiming for a higher single-digit ROI. When it comes to digital marketing, an acceptable benchmark is five dollars of revenue for every dollar spent.

Measuring ROI

The formula for ROI is quite simple; think of it as the formula for per cent increase, but the two values are the initial investment and the recorded returns. It goes like this:

ROI = [(return – investment)/investment] 100

Digital marketing is spread across various mediums, from search engine optimisation (SEO) to social media marketing. The calculations for each medium are more or less similar, but getting the complete picture of a business’s overall campaign requires looking at multiple ROI values.

The good news is that most marketing tools publish this information, saving business owners and marketers the trouble of crunching the numbers. It all boils down to the kind of ROI metrics you choose to monitor, some of which help more than others. Some professionals refer to these as ‘vanity metrics,’ but they’re vain if only taken at face value.

When used with others, these vanity metrics can be valuable in setting more achievable goals and determining future marketing strategies. Marketing experts suggest tracking five to eight metrics that align with the campaign’s objectives. Below are some examples.

Any marketing campaign works with the aim of growing the customer base, and customers start out as leads. When they interact with an ad or subscribe to the newsletter, they become leads. If an advertiser pays AUD$100 for an ad that acquires 200 leads over the month, it’s spent AUD$0.50 to get a lead.

That’s the campaign’s cost per lead, a useful metric for campaigns that hinge on newsletters or rewards programs. It’s worth noting that a lead doesn’t always become a paying customer, hence the need to compare this with other metrics.

The conversion process is structured as a funnel where a huge number of leads is eventually reduced to a small set of customers. It entails multiple levels based on the marketing model. Cost per acquisition refers to how much the campaign has spent on moving a lead through each level until finishing off as the business’s newest customer.

This metric has broader coverage than cost per lead, resulting in a more detailed view of the campaign’s overall impact. It sees much use in pay-per-click (PPC), affiliate marketing, and content marketing, to name a few.

  • Conversion rate by channel/device

A conversion in this context refers to a visitor responding to a call to action (CTA). There are various types of CTAs, from clicking on a prompt in the content to, of course, purchasing the product or service. A conversion rate shows the percentage of visitors that responded to those CTAs; 20 people converting out of 100 unique visitors results in a conversion rate of 20 per cent.

Digital marketing employs two conversion rate metrics: by channel and by device. Channels refer to the platforms on which the visitors have accessed the CTA, such as social media, paid ads, and search results. Devices are the hardware they used to access the CTA, as in desktop computers and mobile gadgets.

Marketing sense dictates favouring conversion rate over organic traffic for the simple reason that a conversion is already a customer, thereby contributing to ROI. Assessing conversions by device is just as crucial, seeing that mobile is a part of digital life. Not optimising content for mobile is a good way to lose out in a tech-heavy business environment.

The next two metrics work better for measuring the ROI of e-commerce campaigns, but other businesses can also make use of them. First is the average order value, which determines how much a customer spends per order. Sales teams employ this metric for reporting revenues and customer retention figures.

Most marketers seek this metric, as it can increase with improvements made in every stage of the sales funnel. Recommending additional products or pricier bestsellers are surefire ways to increase average order value. It’s also more cost-effective than increasing traffic.

Studies show that existing customers have a higher chance of converting than new ones (but it doesn’t mean businesses should stop growing their customer bases). It isn’t hard to see the reason: a customer sticking with a brand for a long time is more likely to spend more because the brand has proven its weight in gold to their eyes.

Customer lifetime value measures potential revenue from a customer over the time they stay loyal to a brand. The calculation can be complicated because it requires two values: average revenue per user and churn rate, both of which require calculations of their own.

The metric’s result depends on the business model. E-commerce campaigns can get an exact value, whereas services and other transactions may have to use historical data to calculate a predictive value. Nevertheless, the metric gets much love from executives for its reliability.

This list is by no means exhaustive. Evaluating multiple metrics makes for accurate reporting of a campaign’s ROI and proper adjustments for future campaigns.

Improving ROI

Once you have your set of essential ROI metrics, the next step is to improve them as much as your marketing budget allows. First, you’d want to set up benchmarks for each selected metric. One ideal way to do so is by developing SMART goals, which stand for:

  • Specific: Target metrics that can use some improvement.
  • Measurable: Indicate conditions that the metric’s improving.
  • Assignable: Assign a person or team that’s up for the task.
  • Realistic: Develop goals that are within the business’s capability.
  • Time-related: Set a time limit for the goals to be achieved.

Randomly thinking of SMART goals is a quick path to a marketing disaster. It pays to base your objectives and methodologies on current trends, raw data, and other relevant variables. Look for opportunities and don’t hesitate to seize them.

Above all else, run an ethical marketing campaign. Despite rampant cases of scams and various forms of false advertising, businesses will find that newer generations of customers are growing more aware. When caught red-handed, misleading customers can undo whatever gains were made, including the all-important consumer trust.

Upholding ethics in digital marketing requires five fundamentals.

  • Empathy: Understand the customer’s needs and wants.
  • Honesty: Refrain from exaggerating benefits and other claims.
  • Transparency: Provide truthful info about products and services.
  • Promise-keeping: Intend to fulfil obligations to the best of your ability.
  • Sustainability: Commit to a healthy environment and society.


Harnessing digital marketing boils down to determining a campaign’s ROI. Simple yet accurate, this measurement helps business owners know the kind of campaign people go for. That said, it isn’t a single figure, but rather multiple values spread across several metrics. While not reliable on their own, they create a clear picture of a campaign’s performance when put together.

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