As you know, 80% of the advertising budget of any advertising campaign is wasted. The question of the profitability of this or that way of promoting your business is the most painful one for an investor and a business owner.
It is necessary
- Access to site statistics on the Yandex. Metrica service.
- Access to a similar counter in Google Analytics.
- Reports on orders or replenishment of the customer base for a certain period.
- Data on the cost of goods and profits.
Instructions
Step 1
Selecting Key Metrics: Check your ad campaign data. What indicators can you calculate the same for all advertising sources? These can be calls to specific numbers for each segment, applications from different pages of the site, or registered transitions from affiliate programs. The key indicator should be the same in the end for the convenience of calculating ROI. Consider the fact that you can calculate the return on investment for a specific employee. In this case, it is convenient to include in the "cost" column the monthly salary with all tax deductions.
Step 2
Collecting statistics: at this stage, the interaction of all departments is important, download the monthly report from the Yandex. Metrica service, Google. Analytics, collect data on calls, on requests in the administrative panel of the site.
Step 3
We believe that we have succeeded. For each advertising source, you should get 4 indicators, namely: "Consumption", "Number of orders", "Cost of one order", "Income". If you are selling a complex service, then it is wise to keep track of customers rather than individual orders. In this case, the cost of attracting a new customer can be high, however, in the income line you also write not the amount of the transaction on orders per month, but the estimated lifetime value (LTV) coefficient.
Step 4
"Magic" formula. All the data is in our hands, now we calculate the percentage of ROI using the following formula: ROI = (income - cost price) / investment in advertising * 100%.
Step 5
Analysis of the effectiveness of the advertising source. By itself, the ROI indicator is useful only for a binary assessment of whether the business pays for the investment for a certain period. Accordingly, with an indicator exceeding 100%, the business is profitable. But by itself, this figure does little to a business owner who can get such summaries from the accounting department. The whole point of calculating the return on investment in marketing is to select the most effective advertising channel and redistribute human and financial resources to it.
