'Inbound & Down'
Question of the Day

Published December 20, 2019

What is ROI?

  1. A file format for images, similar to png or jpg.
  2. A financial term which explains average returns of the stock market.
  3. A metric used to measure the performance of a marketing campaign.

The Answer is C.

ROI stands for Return On Investment—a key measure used to determine how well a marketing campaign has performed. It can be calculated by dividing the revenue produced by the campaign by the total invested. 

For example, if you spend $1000 on a campaign, and earn $10,000 in revenue, you can effectively say that you received a 10x ROI. This is a fractional format; if you want to express the figure as a percentage, simply multiply by 100 to calculate a 1000% return. 

ROI is easily measured in relation to direct response marketing campaigns, such as Google or Facebook ads, which spend a set amount on ads and receive a defined number of leads or revenue in return. 

Measuring ROI for content marketing or SEO (search engine optimization) can be a bit more difficult, as results are typically less clear cut. For example, someone might read a blog, but then leave your website and convert at a later date via a different method, or computer. 

If a visitor leaves a direct response landing page or form, they’re considered a bounce—though this is changing as multi-channel attribution becomes more robust and ubiquitous. By its nature, organic marketing tends to naturally pull in users at all stages of the funnel, making the path to conversion anything but a straight line.

An example of an ideal path would consist of a visitor reading a blog, followed by engaging with the next five pieces of content on your site that address his/her particular pain points, then filling out a contact form and becoming a customer.

But this is not how modern marketing works. 

Instead, a user may read your article, skim five other websites to verify your information, then leave and mull it over for awhile before finally making a purchasing decision several days, weeks, or months down the line. At this point, all tracking information on that user will have disappeared, making it increasingly difficult to measure which content was ultimately responsible for his/her conversion. 

On the positive side, content marketing and SEO typically have a longer lasting effect than other forms of marketing. If you can drive the traffic of a page on your site to rank on the first page of Google, for example, it may potentially remain there for years, continuing to attract attention to your business and bring potential customers into your ecosystem. 

Measuring ROI is a simple concept, but accurately calculating it can quickly become complicated, especially when talking about multi-channel attribution or organic marketing. That doesn’t mean you shouldn’t try, though, as it’s a crucial metric for understanding the health of your marketing efforts, and business in general.

Remember to consider the nuances of your situation when setting up campaigns, and try not to become discouraged if organic methods prove more difficult to measure over time. 

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