What are ROI and KPI in Digital Marketing

One question every business asks is the percentage of returns on every investment made. While this is an age-old question the answers have, however, changed over the years. With the changing dynamics of businesses across the world, Key Performance Indicators (KPIs) and the Return on Investment (ROI) have also evolved.

ROIs which were purely related to financial investments in traditional businesses, now focus on much more than that. Namely, engagement and several other customer-initiated activities. The nature of KPIs has also shifted from footfall count in a physical shop or flyers that prompted customers to make a buy. Now, KPIs are measured with clicks per ad and cost per lead.

ROI and KPI in digital marketing have evolved much within the last decade and continues to do so. Advertising campaigns and website designs that were initially brand-centric are now customer-oriented. If you are confused about how to ace a digital marketing campaign, consider hiring the best digital marketing agency in the USA for accurate results.

The Present Scenario

Constant changes in the digital industry have led to changes in the ways businesses operate. Better software have been developed that measure business performance along with in-depth reports on the competition. Some tools are so well-designed that you can even automate marketing campaigns and get results in the end.

The next question is what are the new KPIs and how can digital businesses measure the ROI of digital marketing?

The New Age of Key Performance Indicator (KPI)

There are several KPIs when it comes to digital marketing like subscriptions, bounce rates, page clicks and unique views. These allow businesses to take a peek into how well a marketing or an outreach plan in working confined to specific measurable areas. A thorough look into each KPI shows how well a marketing campaign is performing that will also give you the ROI.

The Relation of KPIs and ROI with Digital Marketing

A spreadsheet of Google Analytics of a Facebook business gives you detailed information in the form of statistics, percentages and charts. The best way to understand a metric is to first reflect on the ones that affect the ROI. Once you get the hang of it, you can apply them accordingly to digital marketing efforts.

There are several metrics and each one offers unique ways of measuring certain metrics. However, using a lot of metrics can confuse you and take your focus away from the actual objective. Metrics that are advised by marketing agencies are tried and tested ways that yield better results.

Here are some important KPIs used in digital marketing and how to apply them effectively.

●     Cost per Rates

The following categories help businesses measure the amount a company spends to attract leads as well as convert them.

Cost per lead is a KPI that measures every dollar spent on a lead attracted from various marketing channels. The amount spent should be less than the number of leads received in a campaign.

Cost per acquisition is the difference between how many leads were generated versus how many leads were successfully converted. This can be calculated by dividing the cost per lead by the total sales.

●     Lead Close Rate

When we talk about acquisition costs, the lead close rate is the second factor that affects lead generation. This rate allows digital marketers to make meaningful analyses while tying it with other digital metrics. The close rate is compared to the number of leads generated in a marketing campaign. However, since the close rate is a pure digital marketing metric, it can be less useful when the business is both real and virtual.

●     Average Order Value

Businesses often rely on sales figures to determine if the business is growing at a steady rate. This is misleading! The average order value is the amount of money a customer spends on every order placed with your business. The statistics of if going up or staying at the same level or decline will determine how your business is performing.

●     Conversion Rates through Different Marketing Channels

Digital marketing is a mix of various channels where campaigns run to generate leads and make sales. The best way to stay focused on calculating the ROI, you need to see which channels are generating leads and which ones are attracting paying customers. Some channels will have the sole purpose of creating a buzz for brand awareness.

The simplicity with which the purpose of marketing channels has been explained is not just that, it gets much more complicated. There could be higher engagement to an ad campaign which can all be organic on one social platform. However, the conversion rates could be higher through a smaller percentage of engagement but another platform.

Every platform will have a different engagement rate and a different conversion rate. You must calculate the ROI of each platform individually.

●     Conversion by Device

Conversion rates can vary depending on which devices it is being accessed through. Digital marketing platforms display differently and have a unique algorithm design. It is possible that the audience could be engaging with your brand from mobile devices but making a purchase through a desktop computer. This is a great way to know where to invest more and where to hold on.

●     Click-Through Rates

This is an important KPI that tells you a lot about your visitor’s actions while they come to your website. All information including website traffic, the time spent on each web page and their journey can be determined with click-through rates. This also allows businesses to see the reasoning why visitors leave the website right away. Bounce rates a quite a concern when it comes to digital businesses.

If you see your visitors leave with items in their cart without finishing the purchase, you will know where the problem lies. Click-through rates help businesses and Google to interpret this data accurately and then design content accordingly. This also influences Google indexing and ranks on search engines.

●     Landing Page Performance

The landing page has to be perfect in all senses! This is the first place where a potential customer or subscriber interacts with your business. Consider how it is performing in terms of conversion rates or generating higher website traffic. The landing page must always make a great first impression in addition to quick load time. This is the place where the first connection is made that can last years.

Reporting & Analysis

Creating reports and analyzing digital marketing campaigns is the best way to calculate ROI. This is only possible if you have all your KPIs up, active and measured. Reporting and analysis help businesses measure performance and make sense of data received. This in turn gives them a fair idea if marketing efforts need to be redirected or refined.

Having access to insights also aids in measuring ROI with accuracy. Getting a better understanding of each of these components can help improvise marketing strategies. This leads to better business performance overall since you now know what would do your business the most good.

KPIs also give you data based on daily, weekly, and monthly statistics which can help in identifying trends. As compared to unidentified temporary spikes or downturns with access to yearly reporting.


Now that you know how KPIs and ROI help with business performance, it is time for you to start working with a professional team. This can help you up to your game in the digital industry and beating the competition effectively.