Why aren’t traditional channels some of the highest ROI marketing channels?

As a marketing professional, you possess a multitude of avenues to engage with new customers. However, with options ranging from billboards to event

As a marketing professional, you possess a multitude of avenues to engage with new customers. However, with options ranging from billboards to event sponsorships and social media campaigns, pinpointing the most effective channels for your marketing budget can be challenging.

[iframe loading=”lazy” title=”3 Digital Marketing ROI Strategies | Learn to Calculate Your Marketing ROI” width=”500″ height=”281″ data-src=”https://www.youtube.com/embed/yD24fofvvVg?feature=oembed” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” allowfullscreen>1. PPC

Why aren’t traditional channels some of the highest ROI marketing channels?

Discover why PPC is one of the most effective marketing strategies for ROI:

PPC advertising is a favorite among marketers seeking concrete data on their strategies. This paid strategy operates on a pay-per-click model, meaning your business pays only when someone clicks on your ad. [Image: PPC ad example for food delivery]

With tools like Google Ads, you can research potential keywords, select the most effective ones, and determine exactly how much you’re willing to pay for each click. Additionally, you can leverage machine learning-driven ads to maximize your ROI. Integrating your Google Ads account with Google Analytics allows you to track user behavior after clicking on your ads, and if you have set up goals, it’s easy to see how your PPC ads are helping you achieve them.

PPC is one of the highest ROI marketing channels due to its ability to target bottom-of-the-funnel users or those ready to make a purchase. Advanced targeting options like location, interests, and device further enhance its effectiveness in generating a remarkable ROI. Generally, companies using PPC advertising see an average return of $2 for every $1 spent. Using Google Ads, however, can likely yield even higher returns, with an average ROI of $8 for every $1 spent.

To calculate PPC’s ROI, use the following formula:

(Gain from Investment – Cost of Investment) / Cost of Investment

For instance, if your goal is to sell a specific product costing $100, and you run a PPC campaign with a cost per click (CPC) of $1.00, fifty people click the ad, and two of them make a purchase.

(Gain from Investment – Cost of Investment) / Cost of Investment

($200 – $50) / $50

$150 / $50

3 * 100

300%

In this scenario, your ROI would be 300%. While this is a hypothetical example, the ROI your company sees from PPC depends on the quality of your campaigns. However, the ability to quickly and easily calculate your ROI allows you to scale up on successful campaigns and improve upon less effective ones.

2. SEO

Learn why SEO is one of the highest ROI digital marketing channels:

SEO is another Internet marketing strategy that provides a wealth of analytical information. From basic metrics like traffic and bounce rate to more complex ones like user flow, you have access to nearly every piece of information you could want regarding your strategy. [Image: Sushi search ranking example]

SEO aims to improve your website’s placement in search results by optimizing your site for both search engines and users. These optimizations focus on creating exceptional user experiences and helpful content, ultimately leading to increased traffic, leads, and sales.

SEO dominates when it comes to the highest ROI marketing channels, as it is a long-term strategy designed to drive long-term revenue. Unlike PPC, you don’t pay when people click on your site, which contributes to SEO’s impressive ROI. SEO also excels at generating ROI by focusing on every stage in the buying funnel, from top-of-the-funnel to bottom-of-the-funnel users. With SEO, you can reach a larger portion of your target audience and nurture them into becoming customers.

The fact that organic traffic, which SEO generates, captures more than 40% of revenue highlights the power of this digital marketing strategy. It is a tactic that companies cannot afford to ignore, especially if they are looking to secure long-term success.

To calculate SEO’s ROI, use the following formula:

(Gain from Investment – Cost of Investment) / Cost of Investment

For example, if your site generates 20 sales per month from organic traffic, with each sale worth $200, leading to a total of $4000, and you’ve invested $1500 per month in professional SEO services, your ROI would be 166%.

An ROI-tracking software, like MarketingCloudFX, can help your business track and measure your SEO ROI more efficiently. This proprietary software provides your company with a convenient dashboard that offers instant insights into your overall marketing strategy’s ROI and the ROI of specific tactics, such as SEO.

3. Email marketing

Learn why email marketing is one of the best strategies for ROI:

Email marketing focuses on lead generation and nurturing. [Image: Email marketing abandonment example]

Through various email campaigns and audience segments, your business can guide leads from awareness to purchase. Email marketing can also be used to build customer loyalty and retention, resulting in significant benefits.

With an average ROI of $44 for every $1 spent, email marketing is renowned for its ability to generate ROI. Email marketing serves as one of the highest ROI marketing channels due to its ability to personalize itself to a user’s wants, questions, and needs.

You can use email, for example, to suggest similar products or remind shoppers about an empty shopping cart. Email can also act as an educational tool, keeping readers informed about an industry and its processes, regulations, and more. Since companies across industries, from manufacturing to e-commerce, can use email marketing, it is one of the best strategies for ROI and can help generate revenue while reducing customer churn.

To calculate email marketing’s ROI, use the following formula:

(Gain from Investment – Cost of Investment) / Cost of Investment

Imagine your business invests $500 in building, designing, and sending emails. In response, you’ve earned three leads worth $1500.

Why aren’t traditional channels some of the highest ROI marketing channels?

(Gain from Investment – Cost of Investment) / Cost of Investment

($1500 – $500) / $500

$1000 / $500

2 * 100

200%

In this case, your ROI would be 200%. Similar to PPC and SEO, you can also view the value of your email marketing in Google Analytics. Depending on whether you use an email platform or hire writers to create email content, your email cost could range from free to a few thousand a month.

With tools like EmailMarketingFX, you can view metrics like opens, clickthroughs, and unsubscribes to improve your strategy and drive ROI improvements.

Traditional marketing campaigns reach the audience you pay to reach – no more, no less. Whether that’s the viewers of a certain TV show, the readers of a certain newspaper, or the residents of a certain address, the positioning of your ad determines who will see it. Unfortunately, reaching wide audiences typically comes with a high price tag.

And even if your business can afford them, it’s challenging to determine whether the ads you place on traditional channels are worth the investment since you can’t directly track the returns. For example, let’s say you’re responsible for marketing an insurance agency and you choose to run a television ad. Your first cost will be production.

The exact cost depends on your budget, the complexity of the ad, and the agency you choose to work with (assuming you don’t have an in-house video production team). The average cost is $342,000 per 30 seconds of the commercial. Then, you’ll have to decide when and where to air your ad.

The price depends on the reach of the networks you choose, as well as the time slot of your ad. The average 30-second spot on NBC, for perspective, costs around $425,000. Of course, this number comes from days with standard programming – not events like the Super Bowl, which cost advertisers $5.6 million per 30-second spot.

After all is said and done, it’s safe to say that ads on traditional networks will get your company in front of consumers’ eyes. But do these kinds of commercials really pay off?

The truth is, it’s nearly impossible to say for sure. Unless you ask every single customer where they first heard about you, what other marketing messages they saw that influenced their decision, and what ultimately convinced them to contact you, you’ll never know. This goes for ads on television, in magazines, on the radio, and even through direct mail like brochures and postcards, meaning that if you rely on traditional methods to attract customers, your budget allocation is nothing more than a best guess.

If you want to reach customers in a more cost-effective way (and know for a fact what your budget is accomplishing), Internet marketing is your best bet.

Whether you use SEO, PPC, email marketing, or another online channel, digital marketing offers the best ROI when it comes to marketing a business. Learn more about using the best marketing strategies for ROI with Revenue Weekly!

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