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15 Digital Marketing ROI Metrics You Need To Know

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15 Digital Marketing ROI Metrics You Need To Know


Digital marketing and its corresponding metrics of success and ROI are evolving at break-neck speed.

Over the last few years  (and especially due to COVID), the transformation to digital has accelerated years ahead of what was expected.

Any marketer who has ever dipped their toe into the Google Analytics pool can attest that the sheer volume of data available can be overwhelming.

In order to cut through the noise and accurately measure the ROI of your digital marketing efforts, it’s important that you’ve identified the key metrics you want to track.

In this article, you’ll find 15 essential metrics that will help you measure the ROI of your digital marketing, tell you if your efforts are successful, and show you where adjustments may be needed.

Which Metrics Help You Measure Digital Marketing ROI?

  1. Cost per lead (CPL).
  2. Lead close rate.
  3. Cost per acquisition (CPA).
  4. Average order value (AOV).
  5. Conversion rates by channel.
  6. Conversion rates by device.
  7. Exit rate.
  8. Blog click-through rates.
  9. Customer lifetime value (CLV).
  10. Net Promoter Score (NPS).
  11. Time invested in project/campaign vs. returns.
  12. Traffic to lead ratio.
  13. Return on Ad Spend (ROAS).
  14. Overall revenue.
  15. Customer retention rate.

1. Cost Per Lead

If your website is collecting leads, you need to know how much you’re paying for each lead.

If the cost of each lead is more than what you produce by closing leads, that indicates a backward return on investment.

Knowing your cost per lead lets you know how well your marketing efforts are performing and give you the insight you’ll need for making further strategic and budget decisions.

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2. Lead Close Rate

How do you track your lead closes?

Too often, this is happening offline which means that data isn’t being integrated into analytics or the online data you’re gathering.

That’s fine, but you need to make sure you keep an eye on your lead close rate so you can check that against the leads being generated.

This will help ensure your digital marketing efforts are delivering leads profitably.

This information is also helpful to use as a control against new digital marketing efforts.

If you suddenly get an influx of new leads but find they close at a lower rate, you may need to adjust your targeting efforts.

Measuring close rates also gives you insight into how sales teams and representatives are closing leads into sales.

3. Cost Per Acquisition

Using the data above, you should now be able to figure out your cost per acquisition.

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This can be figured out simply by dividing your marketing costs by the number of sales generated.

You now know what it costs to get a sale, which will help you get a firmer grasp on your ROI.

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Many digital marketing leaders operate on Cost per Acquisition (CPA) models as they only pay for lead or sales based on a set amount or goal.

This helps push and drive goals to conversions or pre-set outcomes.

 4. Average Order Value

While you want to see the number of your orders increase, paying attention to the value of the average ticket can reap significant rewards.

AOV is an essential metric that can help marketers keep track of profits and manage revenue growth and profit reporting.

A slight increase in average order value can bring in thousands of dollars of new revenue and can often be as simple as improving user experience and providing up-sell opportunities.

5. Conversion Rates By Channel

Integrated digital marketing strategies are now essential to overall performance and revenue.

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CMOs are increasingly looking and under pressure to see what channels are performing and what channels are the most cost-effective.

As marketers, we all like to know where our traffic is coming from.

Whether it’s organic, paid, social media, or other avenues, this information tells us where the bulk of our customers are and/or where the marketing efforts are producing the most buzz.

But that’s not the whole story.

Conversion rates can be a better indicator of success and let you know where the best opportunities lie.

Let’s say 75% of your traffic comes from organic marketing and 25% from PPC. But lo and behold, your PPC conversion rates are double that of organic.

What you learn from this is simple: Invest more in PPC. If you can increase PPC traffic to match organic, you’ve just doubled your ROI.

Screenshot from Google Analytics, January 2022

Attribution reporting also helps you understand how channels interact and which channels can influence others with conversion lift.

6. Conversion Rates By Device

Just like checking conversion rates by channel, you want to do the same by the device.

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If one device has lackluster conversion performance, it may be time for you to reinvest in that area, especially if you see traffic for that device increasing.

Mobile is an excellent example of how device shifts happen, and depending on the device, conversion rates will vary.

This is especially true for marketers in ecommerce and retail, where more and more are purchasing via mobile and tablet devices.

7. Exit Rate

How many visitors leave your website from a specific landing page?

Your website analytics should give you the specific number of exits from each of your landing pages.

It may also give a percentage that is the number of exits/the number of page views the landing page has received.

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Use the highest number of exits or highest exit rate percentage to determine which landing pages need conversion rate optimization and additional improvement for stickiness.

8. Blog Click-Through Rates

Blogs are a great way to showcase your brand and thought-leadership and get traffic to your site, but what are you doing with that traffic?

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While blogs have notorious high bounce and exit rates, that doesn’t mean you have to resign yourself to those ridiculously valueless numbers.

Instead, use them to set goals for driving traffic from your blog to your main site.

A small increase in blog click-throughs can provide valuable new business at almost no additional marketing costs.

9. Customer Lifetime Value

You can’t truly understand the ROI of your marketing efforts until you have a good idea of what the average customer will spend over their lifetime.

Let’s say, for example, that it costs you $500 to bring in a new sale or client. But they only make a $500 purchase.

Well, that seems like a net loss once you consider the cost of everything else beyond your marketing investment.

But what if you knew that that customer would go on to spend $500 every six months for the next five years.

The average lifetime value of that client is $5,000.

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Now, $500 to get that customer doesn’t seem so bad, eh?

LTV = Average Revenue Per User (ARPU) x 1/Churn

That’s not to say you want to come out at a loss on every first-time customer, but if the initial investment brings a hefty long-term profit, you can more easily chalk up that first sale as a marketing expense, knowing profits are to come.

10. NPS

Net Promoter Score (NPS) is a metric where customers indicate if they would recommend a product or service to other people and companies.

Net Promoter ScoreScreenshot from SurveyMonkey, August 2021

Based on a scale of 1-10, the scores given are a good indicator of customer loyalty and satisfaction.

NPS = % promoters v % detractors

Tracking promoters v detractors (customers who have left or are thinking of going) helps you measure and improve customer service strategies and tactics.

11. Time Invested In Project/Campaign Vs. Returns

Do you know how much time each person in your organization invested in a particular project or campaign?

If you want to get the most out of each employee’s expertise, you need to ensure that they are working on projects that are worth their time.

For example, if you have programmers who range from entry to expert, who would you want to work on the projects that generate the highest revenue in your organization?

The expert-level programmers, of course.

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Once you know the value of your projects, you can distribute the right people to the right projects.

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12. Traffic To Lead Ratio

An increase in website traffic is a positive sign that your digital marketing campaigns are working. But do those results actually affect your company’s bottom line?

Another way to determine the value of your marketing campaigns is with the traffic to lead ratio. This KPI simply measures the percentage of visitors who turn into leads.

For example, let’s say that your website received 5,000 visitors this month. 500 visitors converted into a lead. For this month, you would have a 10:1 traffic to lead ratio or 10% conversion rate for visitors to leads.

 13. ROAS

Measuring Return on Ad Spend helps identify how well your advertising and paid campaigns are doing.

Digital Marketers are able to see that they spent X and got Y.

This is particularly important when reviewing performance, comparing channel spend and forecasting for the future.

The majority of marketers work to a rule that you should have a 3X return on your investment.

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14. Overall Revenue

As marketers, we are constantly challenged with comparisons to sales performance.

  • When sales perform, sales are the star, and marketing gets little mention.
  • When sales don’t go well, marketing suddenly gets more mentions.

Try to avoid these conflicts by measuring and attributing everything you do.

This could be an entire campaign, a marketing touch or assist, or an asset.

Ensure that your marketing and sales team has synergy in tracking and reporting on bottom-line revenue.

Agree on rules and accountability paths on leads, opportunities, and any marketing activity that impacts or influences sales revenue.

15. Customer Retention Rate

Do you know how to measure the number of customers your business has retained?

To calculate your customer retention rate over a specific time period, use the following formula.

Customer Retention Rate = ((E – N) / S) x 100

For the time period you are analyzing, you will use the number of customers you ended the period with (E), the number of customers you gained during the period (N), and the number of customers you started the period with (S).

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Let’s say that you began the quarter with 200 customers. During the quarter, you gained 35 customers and lost five.

Your formula would look like this:

97.5% = ((230 – 35) / 200) x 100

Conclusion

Regardless of your industry and type of business “what is the ROI?” is the question all CEOs and CMOs will be asking this year.

As digital marketing grows and adoption soars, so does the pressure to deliver results.

Utilize the digital metrics identified in this article and let the data tell your ROI story.

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Featured Image: Grayscale Studio/Shutterstock

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Everything You Need To Know

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Everything You Need To Know

Google’s Freshness Update was a significant ranking algorithm change that introduced the trend of making the search results more precise and responsive to user intent.

The result of the update was the ability to add time as a relevance measure for search queries. This enabled Google to surface content that is trending, regularly occurring (like a yearly event), or subject to frequent updating (like new product models).

The Freshness Update was made possible by the infrastructure changes introduced by the Caffeine Update, which enabled Google to scale up web indexing at an unprecedented scale, enabling Google to surface the most up-to-date content that is literally up-to-the-minute relevant.

The algorithm update was announced on November 3, 2011.

Google’s official blog post announcement stated that the change impacted about 35% of search queries and noticeably affected approximately six to 10% of search queries.

That is a significant change in how webpages are ranked.

Why Is It Called Freshness Algorithm?

The “freshness” name for this update is directly taken from the official Google announcement:

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“Google Search uses a freshness algorithm, designed to give you the most up-to-date results.”

What Made This Algorithm Update Possible

A reason why Google released the Freshness Update was that the new Caffeine indexing system provided Google the ability to process more webpages faster.

The Caffeine infrastructure made it possible for Google to provide fresh results with a higher degree of relevance by using a more granular definition of what freshness means.

Specifically, Google determined that some queries have three different kinds of time-related relevance factors.

The three kinds of time-related queries are:

  1. Recent events: These are search queries that relate to trending or current events, generally news related.
  2. Regularly recurring events: Google’s announcement gave the example of annual events, elections, sports scores, TV shows, and corporate earnings reports.
  3. Frequent updates: These are time-related queries for topics that frequently update but aren’t events or trending topics. Examples are search queries for products that are frequently updated.

Freshness For Trending Topics And Recent Events

Trending Topics

Google shows fresh results for certain queries, particularly if they are trending.

Here’s an example with the keyword LIMoE, which is the name of a Google algorithm:

Screenshot from search for [limoe], Google, June 2022

LIMoE is a keyword phrase that didn’t exist until recently. In the above example, Google is showing the freshest search result.

Recent Events

When the algorithm was released there was no such thing as the Top Stories news section for current events.

Google simply showed news results related to recent events at the top of the search results.

Today, Google will show a Top Stories section when a search query has a recent event type of relevance component.

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For example, a search query for Ukraine surfaces the following search result:

recent events search resultScreenshot from search for [ukraine], Google, June 2022

The Top Stories feature is shown for recent events that are trending. This is an example of the Recent Events type of fresh result.

Freshness For Regularly Recurring Events

This kind of freshness relates to events that happen on a regular basis but aren’t necessarily trending.

Google used the example of a search query that is related to sports as a recurring event type of search query.

A search for NBA surfaces recent sports scores:

Sports Search ResultsScreenshot from search for [nba], Google, June 2022

The recurring events freshness type will have to be updated regularly. A sports event will have to be updated on a daily or weekly basis when the sport is in season.

A presidential election recurring event will have to be updated every four years.

Frequent Update Freshness

The third type of freshness is related to search queries about topics that are always updated, like queries related to product reviews.

For example, the Samsung Galaxy phone has been around for many years and has cycled through multiple models.

Ideally, when searching for Samsung Galaxy Review, the best result will be reviews about the latest models.

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This is a search result for that search query:

Product Review Search ResultScreenshot from search for [samsung galaxy review], Google, June 2022

Query Deserves Freshness (QDF)

Google’s Freshness Algorithm update was not the first time Google used time-related relevancy ranking factors.

In 2007, Amit Singhal (then a Google engineer and a senior vice president), introduced the Query Deserves Freshness (QDF) algorithm in an interview with the New York Times.

In a New York Times interview he explained what QDF was:

“Mr. Singhal introduced the freshness problem, explaining that simply changing formulas to display more new pages results in lower-quality searches much of the time.

He then unveiled his team’s solution: a mathematical model that tries to determine when users want new information and when they don’t.

(And yes, like all Google initiatives, it had a name: QDF, for ‘query deserves freshness.’)

…THE QDF solution revolves around determining whether a topic is ‘hot.’

If news sites or blog posts are actively writing about a topic, the model figures that it is one for which users are more likely to want current information. “

The difference between QDF and the Freshness Algorithm Update is that the QDF algorithm appears to have been more limited in scope and less nuanced than the Freshness Algorithm.

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In a Nutshell: The Difference Between QDF And Freshness Algorithm

  • QDF was examining if a topic was trending among news sites and blogs.
  • The Freshness Algorithm examined search queries to determine if they belonged to one of three categories of queries that required fresh results.

As mentioned earlier, the Caffeine web indexing system, introduced five months before the Freshness Algorithm, provided Google the ability to provide search results that were relevant to the minute.

The fact to remember about QDF is that the 2007 Query Deserves Freshness algorithm preceded the 2010 Freshness Algorithm.

What can cause confusion is that Googlers continued to make references to the concept that a Query Deserves Freshness well past 2010. So even in 2012, Matt Cutts was referencing the concept in a Google Webmaster Video that certain queries deserve freshness.

Nevertheless, they are two different algorithms that were introduced three years apart and apparently did different things, since the technology that made the Freshness Algorithm possible in 2010 (the Caffeine web indexing system) didn’t exist in 2007.

Is Fresh Content Necessary To Rank?

Not all search queries require fresh results. Many search queries are evergreen.

Evergreen, in relation to the information needs of search queries, means that the answer to some queries doesn’t change much, if at all.

An example of evergreen content is a recipe. The method for how to make chocolate cookies stays relatively the same for many years.

Sometimes, there are cultural changes that affect evergreen content, such as a trend to low fat or low sugar cookies, which might change how cookies are made.

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But the cookie recipe is still evergreen.

The Freshness Algorithm only kicks in when the search query fits into one of the following three categories:

  1. Recent events.
  2. Regularly recurring events.
  3. Frequent updates.

Myth Surrounding Fresh Content

There is an SEO strategy that recommends changing the date of publication or the modification date every week, month, or year because, according to the strategy, “Google loves fresh content.”

There are even WordPress plugins that will bulk update the post-update dates.

But the truth has always been that the “Google loves fresh content” idea is a myth.

Even three years after the launch of the Freshness Algorithm, Matt Cutts, a Google engineer, was still explaining that freshness is not always a ranking signal.

Matt explains this in a 2013 video where he answers how important freshness is for ranking.

“How important is freshness?

So there’s a little bit of an interesting twist in this question where it’s not just the case that something is frequently updated …in terms of the pages on your blog or on your site, that you automatically should be ranking higher.

So I wouldn’t have that interpretation of freshness. …not every query deserves freshness.

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So if it’s a navigational thing, if it’s evergreen content, sometimes people are looking for long-form content or doing more research, then freshness wouldn’t be counting as that much.

…we have over 200 signals that we use and the thing that I would not do, the pitfall, the trap that I would not fall into is saying, okay, I have to have fresh content, therefore I’m going to randomly change a few words on my pages every day and I’ll change the byline date so that it look like I have fresh content.

That’s not the sort of thing that’s more likely to actually lead to higher rankings.

And if you’re not in an area about news, if you’re not in a sort of niche or topic area that really deserves a lot of fresh stuff, then that’s probably not something that you need to worry about at all.

…there’s some content that’s evergreen that lasts and stands the test of time. It might be better to work on those sort of articles…

…if you write about video games, there’s a lot of like topical breaking news, then it is good to try to be fresh and make sure that you have, you know, content that’s especially relevant.”

Who Needs To Rank For Freshness Algorithm

Publishing new content regularly is generally a good strategy for many kinds of websites.

However, publishing up-to-date content for websites on certain topics is especially important.

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Websites on topics related to rapidly changing consumer trends, topics surrounding regularly occurring events, and sites about products that are frequently updated require a steady stream of fresh content.

The upside of publishing news and trending content is that it can result in high levels of traffic, sometimes immense amounts of traffic.

The downside is that after a couple of weeks it may no longer be fresh or relevant to the same search queries that triggered the massive traffic when the topic was trending.

The best thing to do is to understand if your content topics fit into one of the three freshness categories and if so, get writing.

If the content topic doesn’t fit into those categories, then the topic is evergreen.

And it’s not a bad idea to have a mix of both fresh and evergreen topics so that visitors arriving for the freshness have the opportunity to stay for the evergreen.

Knowing what the Freshness Update was about is still useful for developing a content strategy because Google today is better able to understand which queries deserve freshness, which creates opportunities for publishers to gain more traffic.

More Resources:

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Featured Image: A.Azarnikova/Shutterstock



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