March 3, 2010
Return On Investment (ROI) is the relationship between the total amount you spend and the total amount you earn from a certain internet marketing campaign.
If you are doing any online marketing campaign, then Return On Investment (ROI) is the most important measurement to estimate your success and the one metric that you must work hard on to improve over time.
Generally speaking, Return On Investment (ROI) is a performance measurement used to evaluate the efficiency of an investment and to compare the efficiency of one investment to the other or over a certain period of time.
Return on investment is a very popular metric due to its versatility and simplicity. That is, if an investment does not have a reasonable positive ROI, or if there are other opportunities with a higher ROI, then this investment should not be done. Return On Investment (ROI) is the final measurement of success for any advertising campaign.
How To Calculate your Return On Investment (ROI)?
Return On Investment (ROI) for any advertising campaign is very simple to calculate. There are only two variations in the calculation formula:
- Total cost of advertising campaign including all expenses related to this specific campaign
- Net Profit of this specific advertising campaign.
The Net Profit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
Why should you constantly monitor your Return On Investment (ROI)?
Constant monitoring of your Return On Investment (ROI) either daily, weekly or both will guarantee 5 vital goals
- To ensure that you are not losing money on any advertising campaign on a daily or weekly basis.
- To detect any sudden decrease in the performance of any campaign and to take necessary actions to put it back on track.
- To detect any sudden improvement in the performance of any campaign and to take necessary steps to exploit the situation for your advantage.
- To assess the effect of changing different elements of the campaign to keep the best elements as in split testing and other testing methods.
- To detect if the campaign is achieving its goals or falling short.
How To Increase Your Return On Investment?
The two most important factors to improve your Return On Investment (ROI) are:
1 – Professional Search Engine Optimization.
2 – Website Conversion Rate Optimization.
First: Website Search Engine Optimization
Search Engine Optimization is one of the best internet marketing strategies to improve your Return On Investment. SEO if done properly will bring your pages to the 1st pages of Google, Yahoo, Bing and other major search engines. This will simply give you much more exposure for a long period of time.
Once the initial cost of Search Engine Optimization is paid, you do not need to pay much money to keep your publicity or exposure on the internet.
Other traditional online and off line advertisements require continuous payment to keep your ads running. These payments accumulate to a huge amount of money over time that will far exceed the total cost of Search Engine Optimization.
Proper Search Engine Optimization can be in the form of a combination of any number of the following factors:
- Meticulous keyword research, analysis and selection to find and use the most profitable keywords for your business.
- SEO copywriting your main website pages and your landing pages to make them more Search Engine Friendly and more easily found by search engines.
- Link building to improve your link popularity and to achieve a top search engine placement.
- Social Media Marketing to create more brand loyality and to reach more targeted visitors.
- (YOU DON’T PUT POINT #5 LIKE IN THE OTHER FILE??)
Second: Website Conversion Rate Optimization
When you increase your Conversion Rate, you will get more leads and more sales from your targeted traffic.
A variety of improvements can be applied to increase Conversion Rate:
- Find what are your Unique Selling Points (USP) and make them clear and obvious in your website and your landing pages.
- Improve your website design to be more search engine friendly and to better communicate your message to your visitors.
- Improve your website usability and accessibility to make navigation and finding information, products or services easier for your visitors.
- Improve your sales copy to clearly present the benefits of your products or services to be more convincing and compelling to your visitors. Such a Sales copy will encourage and entice your visitors to convert.
- Improve landing pages to accurately match your advertising campaigns and the keywords used in them.
- Ensure that your landing pages are closely relevant to the content of your website.
- Track your campaigns and analyze results to improve performance.
- Experiment with different ads, and split test every element and every step of your campaign to fine tune your marketing campaign and improve your return on investment (ROI) results
Nashat Mostafa is a Montreal SEO consultant and the founder of SEO 7 Services. During his long career as a SEO consultant, Mostafa has worked with many small and medium sized companies to plan and execute different search engine optimization and internet marketing campaigns to increase website conversion rate and improve return on investment (ROI).