Business owners like yourself invest in marketing services in the hopes to gain back profits much higher than what they have originally invested.
Services like Search Engine Optimisation return an average of 1.75x, meaning that you’ll make £1750 for every £1000 invested, which equals a net (and in this case, recurring) £750 profit.
This is called Return On Investment – essentially, a calculation of how much money you have gotten out of your marketing investment.
Obviously, marketers want their ROI to be as high as possible to create high-profit margins for themselves and their shareholders.
This is why we have transitioned from traditional to Digital marketing: because Digital marketing just works so much better than traditional marketing.
And this article will explain to you why Return On Investment is so much higher with Digital Marketing, and how to get an even higher ROI.
Why is Digital Marketing so effective?
When we say that ROI is higher with Digital Marketing compared to traditional marketing, we mean HIGHER.
Thanks to ad campaigns that directly land under your target audience’s eyes, and free social media platforms that let you share as much as you want, you can get an average ROI of 5:1 – that is £5 earned for every £1 invested.
So, on a £1,000 budget, you’ll be earning an average of £5,000. This is considered almost unreachable with traditional marketing.
This number can get even higher.
Digital Marketing simply works well because of how measurable the metrics are.
With traditional marketing, you’d have to wait months to see the results of your campaign. Business owners used to put their ads in newspapers and other mediums and calculate the effectiveness at the end of the campaign – as you can probably imagine, sometimes this was disastrously bad.
However, digital marketing allows you to immediately discover how effective a single piece of the ad is performing and change your strategy accordingly. Print ads cannot be adjusted, but an Instagram post can be edited on the go to better suit your needs.
This fluid and performance-driven strategy allow you to outperform marketers that only rely on traditional methods every single time.
A marketing strategy driven by numbers
However, the secret behind Digital Marketing and its success is its ability to target specific people.
Traditional ads work by feeding information to as many people as possible and hoping for as much response as possible. However, digital marketing lowers costs and increases conversions by only targeting those who are actually interested in purchasing your products.
As soon as these leads are discovered, much more money can be invested into them to turn them into loyal customers, rather than one-time buyers.
Digital Marketing mediums such as Pay Per Click, Social Media marketing and Influencer Marketing allow you to target specific demographics that are ready to buy – the more niche your audience is, the higher your ads will convert.
The opposite can be said with traditional marketing.
Digital Marketers earn big with a multi-channel strategy
Not every digital marketing strategy is the right one for your business. For example, PPC works better if you have a bigger budget to scale with, while SEO is for those who want a long-term strategy.
You may say that different services give you different rewards, which is why we like using a “mix-and-match” attitude to get every single reward out there.
However, most traditional marketing works the same way. You just invite as many people as possible to buy your products and hope for the best.
Do you want to explore the different types of PPC campaigns you can use for your business? Explore our latest article!
Digital Marketing lets you conquer the world
When you choose traditional marketing, you are bound by your physical location.
Therefore, forget about selling overseas.
You can become an international business, however, when you opt-in for an International Digital Marketing Strategy.
It’s just about every business’s dream to become internationally recognised – and turns out, it’s not as hard as you might think to get there when you know what you are doing.
How do you make a Digital Marketing strategy an international one? By deploying local expertise and a ton of research.
You need to understand whether or not you want to target native speakers in a certain language – if so, you need your content translated and optimised for multilingual SEO.
After you do that, it’s literally as easy as pressing a button: deliver your translated content to your audience but don’t forget to adjust it based on cultural differences.
Another tip: don’t forget to adapt based on the local competition and habits. You can do this by interviewing locals and partnering with local brands.
Starbucks struggles to be successful in Italy since the population is so adamant about drinking plain espressos and nothing else.
However, Mcdonald’s McCafes are incredibly popular there – sometimes they sell coffees more often than burgers!
Recommended read: International SEO tips
A summary of the benefits of Digital Marketing vs Traditional Marketing
- Since you are promoting through digital mediums, you can target just about anyone who disposes of an electronic device – you can even specifically target people with a specific device such as a tablet or a phone.
- Digital Marketing is much more cost-effective
- Depending on the size of the campaign, Digital Marketing is often cheaper than Traditional Marketing
- It’s much more effective for brand building
- It’s easy to measure thanks to clear metrics and computer-generated graphs
- It’s much simpler to calculate Return On Interest
- You can change your strategy on the go, which is extremely powerful.
- You can use an analytics tool to track the success of specific pieces of ads.
- It allows for a global reach
- You can target specific parts of your target market
- It gives results much faster thanks to instantly performing services such as Pay Per Click and Social Media Ads.
How to calculate ROI
To calculate ROI, use this formula:
ROI = (Net income/Money invested) x 100
Make sure you are calculating it on your NET income.
So, for example, if you earned £2500 from your £1000 Pay Per Click campaign, your Return on investment is 1500/1000×100, or a 150% Return On Investment (1.5:1 in a ratio format).
How to effectively increase ROI
40% is just an average number. With the right strategy, a marketer can make back their money spent up to 250 times!
This is done through performance marketing.
So, to conclude this article, how do I get the maximum Return On Investment on your digital marketing campaign?
By focusing on Performance above all else.
Performance marketing is your most valuable asset if you want to increase your overall ROI.
Don’t let technical words scare you!
Performance marketing works on three holy commands:
- Focus on minimising costs
- Focus on maximising profits
- Rinse and repeat until maximum performance is achieved.
A performance marketing agency like topflight focuses on ad campaigns that are low risk for your budget but still highly rewarding.
On top of that, they will only use results-proven channels that generate the exact result you need – channels such as Social Media Ads, Influencer Marketing, Pay Per Click and Search Engine Optimisation are incredibly popular among digital marketing agencies thanks to the metric-driven approach and ability to scale and improve over time.
Performance marketing works better than standard digital marketing, which justifies the higher Return on Investment
For example, a conventional digital marketer will use Facebook ads while a performance marketer will instead use scalable and controlled channels such as affiliate and influencer marketing to target smaller but higher-converting audiences.
This results in cheaper and more effective campaigns, as well as a more dedicated audience in the process.