The Importance Of Marketing – And How To Measure ROI

You know we love storytelling here at Vincent Design. It’s an essential part of our creative process and the foundation of effective marketing: a good story, even a short one, connects with people on a deep level to leave a lasting impression. When done right, it builds a relationship between your organization and your audience, in turn driving brand awareness, engagement, trust, loyalty, sales, and more.

Without marketing, even the best services and products can be overlooked by consumers. Everything from print and digital ads, email and social media campaigns, websites, and videos are valuable marketing tools that capture audience attention and communicate the value of your business or organization. With a full marketing strategy, taking market trends and consumer behaviour into account, you can create tailored messages and campaigns that speak directly to your customers and their needs, to attract the audience you’re targeting. 

But how do you know your marketing is working? In an ideal world, anyone investing in marketing should also be evaluating their return on investment (ROI) – measuring the results of all marketing efforts to see what works and what doesn’t. Knowing your ROI tells you if your marketing efforts are cost-effective and demonstrates the value of your marketing budget in a tangible way. Likewise, the metrics you use to measure ROI can help your organization make evidence-based, data-driven decisions toward strategic goals and long-term growth.

Yet many businesses find it challenging to decide which marketing metrics to track, or how to measure them comprehensively enough for meaningful analysis. Let’s take a close look at ROI and offer our best practices for making the most of this useful marketing tool.

How to calculate ROI

If your company sells a product or service, then calculating ROI boils down to determining the profitability of your marketing campaign relative to its costs:

ROI (%) = [(Revenue Generated – Marketing Cost) ÷ Marketing Cost] × 100

Let’s break this formula down a bit. Adding up your total marketing costs is pretty straightforward: include all expenses associated with a campaign such as ad spend, content creation for videos, blogs or websites, any tools or software used for marketing, and any salaries or fees for staff or outside firms. To determine the revenue generated by your marketing campaign, you’ll want to add up the related sales data, lead conversions, and other direct and measurable outcomes. In general, a higher ROI indicates an effective marketing campaign. 

For example, if you spent $5,000 on a digital ad campaign, which generated $15,000 in new sales revenue, measuring ROI would look like:

Sales revenue generated = $15,000

Marketing costs = $5,000

ROI = [(15,000 – 5,000) ÷ 5,000] × 100 = 200% (i.e., a 200% return on your marketing investment).

It’s also helpful to consider the indirect value of marketing – those outcomes beyond sales and lead conversions. Long-term strategies like SEO or brand-building have a lifetime value that can and should be considered, and metrics like increased web traffic, brand awareness and engagement, participation in programs, and use of services or facilities are all useful indicators of overall marketing impact. These kinds of indirect outcomes can be harder to quantify but are still important indicators of the success of your marketing efforts and should be tracked.

Keeping track of your ROI metrics

If you’re measuring your marketing ROI for the first time, you’ll want to start by thinking about which direct and indirect metrics you’re going to track. Start with key performance indicators that link to specific marketing campaigns and include any metrics that reflect your overall goals: sales, website traffic, social media engagement, brand awareness, etc. Being consistent in how you monitor and measure your metrics is also key to your ROI assessment. Whatever you choose to measure, you want to make sure you track those same metrics in the short and long term, so the numbers are comparable month-to-month and year-to-year.

You can use anything from a simple spreadsheet to more advanced tools and platforms to keep track of your metrics, many of which are easily accessible thanks to digital marketing. Google Analytics, HubSpot, UTM codes, and customer relationship management (CRM) software are all examples of digital tools that can be used to track and measure marketing performance in real-time.  

Interested in learning more about ROI? We can help. Whether you are new to measuring ROI or you’re looking to evaluate your marketing data more strategically, we can walk you through all your options. Just use our contact form to get in touch – we’d love to hear from you!