Calculating the ROI from your traditional marketing strategies is somewhat different from calculating the ROI from your online marketing strategies. The difference lies with the tools that you can use to measure conversion rates and track the ROI.
Let’s start with traditional marketing-
In traditional marketing, there’s really no perfect way of measuring and tracking the ROI. The best that you can do is come up with estimations for the gain you could get for that investment. Some people who would just take notes on how much they spent for an ad, and then compare it to the profit they earned after using that ad precisely? Of course not. But few things are when it comes to calculating ROI for marketing campaigns, whether online or offline.
Why is it so difficult to track ROI for traditional marketing?
It’s because your audience is very wide, and there’s little means by which you can measure conversion rates. For example, you don’t know who sees and who really looks at your ads on television or on the newspaper. You’ll find it very difficult to guess if a person who buys from your store was led there by your billboards or your fliers.
Still, there are so-called “surrogate” means of measuring ROI in traditional marketing. Instead of focusing on the profit you gain, why not look at how much you’ll save with an investment? Remember that traditional marketing is one-way, and its main purpose is for brand awareness. Knowing this, what media will you use to increase your brand awareness, and at the same time save you money?
Another way is by measuring the conversion of sales before and after marketing. Before you put up an ad, how was business? Now that you have an ad, what changes have you seen in your numbers? For print advertisements, there’s usually a unique phone number or an email address that people can use to contact the company.
You can use the number of people who call, text, or email these details to measure the number of people who have seen or heard about your advertisement. These are just some of the ways traditional marketers measure the success of their campaigns.
Let’s see online marketing-
With online marketing, tracking and measuring ROI can be both easier and harder. Let’s take the easier route first: it becomes easier because the factors that you’re looking for can easily be measured using online tools. Take, for example, with SEO.
SEO, or Search Engine Optimization, helps increase your visibility on the Internet, mainly on search engine results pages. It is the process of optimizing your site in such a way that it will be deemed relevant by search engines like Google.
If you do your SEO right, then you can expect a higher ranking on the SERPs when a person searches for keywords that are related to your business and products. More importantly, people will see that your website has content that is relevant to their needs, boosting your credibility and chance for conversion.
SEO’s ROI isn’t only measured by the amount of traffic driven to the page, the ranking on the SERPs, and popularity. It also focuses on the revenue that will be generated because of SEO.
You can measure the success of SEO by comparing your anticipated ROI with the actual ROI. Factors that need to be considered for both anticipated and actual ROI are the number of the website’s monthly visits, your budget used for SEO, how much you earned upon using an SEO strategy, and the conversion rate.
With anticipated ROI, you set your goals, not forgetting the four factors mentioned above. Then actual ROI shows you how you’ve actually done. Comparing the two will help you optimize your site better and implement your SEO strategies more efficiently.
Aside from SEO, online marketing allows you to use social media for the promotion of your business. You can create social pages where you can interact with your followers, and you can post listings on social “directories” to lead people to your brick-and-mortar store.
So, is going with digital marketing is better than traditional marketing since Return on Investment (ROI) can be better tracked?
The good thing about using social media is that every important variable can be measured, and you don’t have to do the measuring manually. The bad thing about using social media is that it’s the part of online marketing for which ROI becomes nearly impossible to calculate with any certainty, at least if we consider ROI in the ultimate sense of “turning a profit”. In that sense, it might have something in common with traditional marketing campaigns.
No precise answer to this because both traditional marketing and online marketing have positive effects on your company. This might sound like a principle, but the answer depends on you and your approach because you have your own purpose for advertising. If opting traditional marketing, then this might mean that you are focused on brand recognition. This could also indicate that you have already established a reputation, and you’re seeking ways to expand your reach in terms of target demographics.
While tracking and measuring ROI is important in helping you calculate sales and revenue, ROI is not the priority in that case. Exposure is. The purpose of marketing is most important.