When you invest, you expect a return. The term return on investment (ROI for short) is a business indicator for measuring the return on investment of an entrepreneurial activity, measured by success about the capital employed. Due to the different calculations of successes, there are numerous variants for the calculation of the ROI. The ROI therefore also includes key return figures such as return on equity (ROE) or return on assets (ROA). ROI is usually the top metric in KPI systems, as companies or their investors often seek to maximize returns on investment. Returns on capital employed before taxes are more suitable for assessing management’s performance and are more comparable internationally (tax rates can differ considerably). After-tax returns on investment, on the other hand, are more realistic about the final return for investors, as taxes undoubtedly drain out and do not create value. Returns on investment after taxes are therefore regularly used as part of value-based corporate management.
This applies to all industries: even the return on investment for a casino online site must be tracked. This allows you to understand how well your investment is working and where you went wrong. This also applies to online ads, and the return on investment made for them should also be tracked. But by its very nature, online advertising investments must be calculated differently. Below, we’ll talk about how you can do this.
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What Is ROI in Online Advertising?
ROI is short for “return of investment”. It is not difficult to keep track of how much benefit you get from a “standard” investment. For example, if you have given 10,000 USD to a supermarket chain to offer your product for sale, you can easily track the profit from the total product sold in that market and see how much return you get for your 10,000 USD investment. Calculating ROI is not that easy for online ads, as there are multiple factors to consider. It is not possible to calculate ROI simply by comparing numbers. To calculate the ROI of online advertising, you need to consider the following.
By looking at the traffic figures of your site, you can see how much awareness you have created for your brand. Here, you get the return of your investment not as profit but as awareness. There are many tools you can use to measure your brand awareness, most of them free services like Google Trends. Using the right tools, you can see where the traffic comes to your site the most (for example, social media, referrals, etc.) and on which platforms the ads attract the most attention. These are data that are important enough to determine both your sales and marketing strategies.
You can calculate this simply by seeing how much your ad campaign has increased your sales. This is the closest metric to the traditional ROI calculation: you compare the sales figures before the campaign starts with the sales figures after it starts. If there is a positive difference, your campaign has been successful. However, this can be a misleading metric: even if you don’t see a significant difference between the two numbers, that doesn’t mean the ad campaign has failed. To decide this, you need to consider other metrics as well.
This metric is for testing the visibility of your ads. Using the free tools we mentioned above, you can test your ads on websites and understand, for example, how visible they are. Are your ads viewable on every device or not? Can you still see them on the mobile site, for example? With this metric, you can make sure that people can view your ads.
By following the user comments on the sites you advertise, it is possible to understand how successful your campaign is from a consumer point of view. Imagine making a video: the comments below this video will show how consumers perceive that product or service. To do this in traditional advertising, you need to conduct surveys among different user groups and allocate a separate budget for it. In online advertisements, it is possible to reach the consumer directly without the need for this. This is perhaps the most valuable metric because it lets you know if you’re truly reaching your audience.
Choose the Right Place for Your Campaign
To make the most of these metrics and ensure you reach your target audience, you need to make sure your campaign is running in the right place and in the right way. In this regard, you have two basic options, and it would be best to use all of them as long as your budget allows.
Mobile Video Ads
These ads consist entirely of videos and are only available on mobile devices. There are multiple reasons for this: first of all, mobile devices can reach the consumer directly and without intermediaries. A mobile ad is also a shared experience, with virtually nothing to distract the consumer. What’s more, when prepared correctly, mobile videos are watched – even if they turn out to be an ad. Imagine creating a campaign with short but engaging TikTok videos: your content on this platform alone can create incredible brand awareness.
Here, your content is published on another site as if it was a part of that site. This is usually text-based content, but it is possible to include videos. For example, IBM has been publishing its content on the Forbes site for years, but it does so as if it was a part of Forbes. When done correctly, the traffic you will get through links in such content will increase both your brand awareness and your purchase influence.