It's similar to a dashboard for your digital marketing campaigns. Understanding it allows you to determine what's working and what's not and how to get the most out of your marketing investment.
You first need to understand a few concepts to get the ROI of your digital marketing efforts. The term “return” refers to the money your marketing makes. Subtract the amount you spent on marketing from that. Next, divide it by what you initially spent on marketing. Finally, divide the result by 100 to get a percentage.
ROI
If the math seems complicated, here's an alternative method. Divide your "net profit" (profits minus costs) by your "total cost" of marketing to calculate your ROI. Then multiply by 100.
#ROI = (net profit / total cost) * 100
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You can predict your ROI when creating a new marketing campaign. Predict how many potential customers you will reach. Then multiply by your "conversion rate" (the percentage of people who become customers) and the average price of your product.
#Expected profitability = (number of leads * conversion rate * average sales price)
For example, if you forecast 500 leads and a 30% conversion rate with an average sale of $100, your expected return is $15,000.