Traditional marketing efforts are historically, pretty hard to compare – how do you measure the impact of a billboard or a TV ad?
Sure, you can estimate the number of people driving by or the number of people watching a TV program….but how do you measure the customers you gain from that? It’s almost impossible. With public displays and television/radio, it’s more about impressions then conversions.
Digital marketing, on the other hand, is a whole other beast. While there’s no perfect version of analytics that can tell you every single detail, with basic marketing dashboards and some 4th grade math, it’s pretty easy to figure out the essentials.
From where your leads come from and the average value of a lead, to the ROI and Cost Per Acquisition (CPA) of your campaigns, you can compare your digital marketing channels against one another to see which channels perform the best and which you need to adjust to reach your goals.
In the realm of digital marketing, understanding your Cost-Per-Acquisition (CPA) and Return on Investment (ROI) is akin to navigating uncharted waters. While it may not be an exact science, we can harness the power of data and analytics to arrive at a remarkably accurate estimate.
However, we can get a really damn good estimate pretty quickly with some basic math and analytics knowledge.
Imagine you’re at the helm of a software company offering enterprise solutions with high-cost-per-click ad campaigns. Your objective is clear: drive traffic to your page and entice visitors to complete a contact form.
With 2,000 clicks and a 5% conversion rate, you’re on the cusp of securing 100 potential customers. Your cost per acquisition, in this scenario, stands at $100—a fundamental formula. However, the story doesn’t end here, especially if your sales cycle is protracted.
Google Analytics (GA4) doesn’t know your sales team or the details of your business. We can go one step further to get an even better picture of your ROI
With 100 leads and a 25% conversion rate, your sales team’s efforts translate to an estimated revenue of $12,500 generated by this campaign. This results in a remarkable ROI of 125% on your pay-per-click search investment. You can expedite this calculation by setting a Goal Value in Google Analytics.
Configure each conversion with a goal value of $125, and you’ll have an instant estimate of your revenue across all channels. This method can be applied to various forms of marketing. Here’s an example in the context of SEO:
With your sales team converting approximately 23 of the 90 leads, the total revenue generated is $11,500. Considering the $5,000 SEO investment, your ROI for SEO efforts stands at a commendable 230%.
This concept can be extended indefinitely with the right analytics tools and best practices in place. You have the power to estimate the ROI of virtually anything, gaining unparalleled insight into where your investments are flowing and how they are impacting your company.
In the ever-evolving landscape of digital marketing, mastering your CPA and ROI is not just an aspiration; it’s a necessity. As we venture into 2024, these insights will be your guiding stars in the vast cosmos of online marketing.
Fortunately, cost per acquisition is easy to figure out for Paid Search – it’s a default metric available in most analytics programs. Organic CPA isn’t a default metric Google gives you, but it’s easy to add a note in a custom dashboard where you note the amount spent on SEO and do basic math to arrive at your CPA.
We’ve also got total goals by medium and a breakdown of some important conversions based on each channel they come through.
Social media is a valuable traffic channel for many companies. Social media promotion tends to be less about generating direct conversions and more about engagement – getting visits to your website, and getting people engaged with your company.
In this example, we’ve compared the top visited pages from organic vs. social, the total number of visits from each channel, and the top sources and time on site for each.
As we can see, the pages that do well in organic are often not the ones that do well in social. Social tends to see much more love for our newer blog posts. We can also see Facebook brings us some awesome quality traffic that spends quite a good bit of time on our website, and those visits are much longer than their organic visit counterparts.
We can also do the same as we did with paid and look at goal completions/conversions for each channel and add enhanced metrics for cost of acquisition, assisted conversions, and more.
There’s no limit to what we can build a report for – Meta Ad Cost-Per-Acquisition? Sure thing. Just want LinkedIn data? We can filter it out.
E-mail marketing has the capacity to be an incredibly effective channel, if with limited reach. In general, with an email marketing strategy, you’re focusing on lead generation and customers you’ve already captured, so the numbers are never going to be as high as organic.
On the plus side, e-mail marketing is often very low in cost – it’s easy to run a basic e-mail campaign on $50/month using a service like Constant Contact. In this comparison, we see that while e-mail is limited and has a low conversion rate, our CPA from e-mail is incredibly low.
Organic is bringing in the bulk of our visits and conversions, but it’s an expensive engagement. A great option here might be to implement an inbound plan to capture more e-mail leads and put them into a lead nurturing workflow.
Another dimension of digital marketing involves comparing within a channel – for example, comparing your Bing Ads campaigns to your Google AdWords campaigns.
In this example, we see that Google is not only bringing us more conversions (which it almost always will because of its larger userbase), but the cost per conversion is lower. Revenue is also increasing from Google and decreasing from Bing – might be a sign to shift more of your budget into Google rather than Bing.
You can expand this concept with the use of custom filters – Facebook vs. Twitter, different organic campaigns; you can even pit e-mail campaigns against one another. Using this type of dashboard is great for fine-tuning your efforts on a certain channel.
A great marketing campaign – be it online or off – needs multiple channels to succeed. Banking solely on one strategy is no longer a viable approach in today’s multifaceted marketing landscape. It’s time to compare different avenues, assess their effectiveness, identify areas for improvement, and adapt your strategy for the year ahead.
If SEO has a high cost of acquisition but you’re getting good leads with Google Ads, it’s probably a good idea to move more resources into paid marketing channels and adjust your organic efforts to get more qualified traffic.
If you’re not getting any engagement on social media like Meta, nobody is visiting the site from your post or interacting with your brand – well, why are you spending time on that? It’s time to adjust the strategy and try something new, or maybe social media isn’t for you and you need to take those resources and put them into e-mail marketing.
Adjusting your strategy and where you allocate your time, effort and money is a critical component of both life and marketing – and while we don’t have a life dashboard for you yet, we have some awesome tools to help our clients compare their marketing channels and make sure they’re getting the best possible bang for the buck.