How to Measure Your Digital Marketing ROI

The Internet is a critical stepping stone in the journey of consumers and business buyers everywhere. More than 70% of people, for instance, now research a company before deciding to become a customer. That’s why businesses of all sizes, from startups to enterprises, invest in digital marketing.

Like any marketing strategy, though, you want to measure your return on investment (ROI) from online channels. Luckily, digital marketing offers plenty of data, which can help you calculate your digital marketing ROI.

If you’re looking for help with determining your ROI from digital marketing, keep reading. This article provides a walkthrough for how to measure your digital marketing ROI, like for email marketing, social media, and pay-per-click (PPC) advertising. Plus, it offers tips on how to improve your ROI.

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What is ROI in digital marketing?

Your digital marketing’s ROI is a measurement of your online marketing campaign’s profits or losses, which you calculate with the following formula: (Net Profit / Total Digital Marketing Costs)*100. Measuring your Internet marketing ROI can help you determine the effectiveness of your strategies.

How to measure digital marketing ROI

Most companies will measure their digital ROI with the following formula: (Net Profit / Total Online Marketing Costs)*100. The most accurate digital ROI calculations, however, come from assessing each strategy and its unique metrics individually, like open rates for an email marketing campaign.

What tools should I use to track digital ROI?

Most marketers use Google Analytics or a similar platform to track and evaluate their digital marketing efforts and set up custom goals to track the most important events for their business. If you don’t yet use the platform, we recommend that you start in order to get a better understanding of the value of your campaigns. 

What metrics should I track for calculating digital ROI?

ROI is calculated using two primary metrics: The cost to do something and the outcomes generated.

When calculating the ROI of your online marketing efforts, it’s important to track and measure metrics that directly tie to revenue, profit, and other actionable metrics that relate to the goals of your business. These metrics include things like leads, conversion rates, and A/B test results.

Keep reading to learn which metrics to track for which strategies!

How to measure digital marketing's ROI for 5 strategies

With traditional marketing strategies, you pay to reach an extremely broad audience, whether that’s the viewers of a TV show, the subscribers of a magazine, or the residents of a certain postal code. It can be difficult to measure the effectiveness of these strategies, since you can’t directly track who takes action after seeing an advertisement.

On the other hand, online marketing allows you to use tools like Google Analytics, which let you monitor, measure, and improve nearly every aspect of your campaigns.

Let’s take a look at some high-yield Internet marketing strategies, and how to measure the digital marketing ROI of each:

1. PPC advertising

equation for spend vs return

Pay-per-click, or PPC, is an advertising model in which you can target search engine users based on the words and phrases they search.

With Google Ads, you can research potential keywords, choose the most effective ones, and determine how much you’re willing to pay for each click.

You can also integrate your Google Ads account with your Google Analytics account to evaluate what site visitors do after clicking your PPC ads, and how your PPC advertisements help you reach your goals.

For example, let’s pretend your primary goal is to sell a product that costs $200 and you run a PPC campaign with a cost per click (CPC) of $2.00. If 100 people click your ad and 10 people make a purchase, here’s how you calculate your ROI:

100 people x $2.00 = $200 spend

10 people x $200 = $2,000 return

In order to calculate your ROI, you can use the standard formula of (Return-Investment)/Investment.

So in this case, (2000-200)/200 = 9, meaning that your ROI would be 900%.

Of course, the digital ROI from your PPC efforts will depend on the quality of your campaigns. But since you can quickly and easily calculate your PPC ROI, you can allocate more spend to the campaigns that drive the greatest results and improve the ones that don’t.

2. Search engine optimization (SEO)

equation for investment vs. return

Like PPC advertising, you can easily calculate the digital ROI of your search engine optimization (SEO) efforts using Google Analytics.

All you have to do is navigate to the Acquisition tab, select All Traffic > Channels, and then click “Organic Search.” And if you set up custom goals in your Google Analytics account, you can see conversions. You can also integrate Google Analytics with your site’s ecommerce platform to calculate the exact value of sales.

Let’s continue with the example above. If your site generates 50 sales per month from organic traffic, each of these sales is worth $200, and you pay an SEO agency $1,000 each month for their services, let’s take a look at your ROI.

1 month x $1,000 = $1,000 investment

50 sales x $200 = $10,000 return

Your digital marketing ROI in this case would also be 900%.

Keep in mind that if your business operates on a B2B model, you might not have direct ecommerce sales to measure. However, you can still easily calculate ROI if you know the approximate value of each of your leads.

You can also use Google Analytics to set up goals for form submissions, quote requests, free trials, and more. And assigning monetary value to these goals can help you see how much revenue your SEO strategy generates for your company.

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3. Content marketing

Content doesn’t cost much to create, and you can continually update it with relevant information to meet the needs of your niche.

To calculate the digital ROI of your content marketing efforts, it’s helpful to look at a few key metrics:

  • Consumption: Page views, unique visitors, downloads, time on site, bounce rate, cost per visitor
  • Sharing: Number of times content has been shared or linked across the web or on social media
  • Lead generation:  Form or email address submissions, guide downloads, opting into email campaigns
  • Sales: Number of deals you close that you can attribute to content on your site

You can also use Google Analytics to evaluate key performance indicators (KPIs) including:

  • Web traffic
  • Conversions
  • Revenue

Calculating the exact ROI of a content marketing strategy is challenging, since most visitors won’t convert after reading a single page on your site, so using different attribution models is often a better way to see its impact on your business.

That being said, if you’re getting more website visitors and conversions since implementing a content marketing strategy, and you’ve noticed an increase in revenue, your content marketing ROI is likely positive.  

It’s important to remember that content marketing is a long-term strategy, and your one-time investment in creating it can produce results for years to come. It needs time to grow and mature, and you’ll often see the best results months or even years after you publish.

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4. Email marketing

You can also use Google Analytics to track the digital ROI of your email marketing campaigns.

To do this, you just need to select “Email” as your channel, look at the value of your goal completions, and compare this to your monthly spend on email marketing. Then, you can use the same formula above to calculate your ROI.

Depending on whether you use an email platform with a monthly fee or hire writers to create your email content, your email marketing cost could range from a few dollars to a few thousand dollars each month.

With tools like MyEmailFX, you can analyze key metrics like open rates, clickthroughs, and unsubscribes to continually improve your ROI.

5. Social media

Like other online strategies, you can use Google Analytics to track website traffic, on-site conversions, and sign-ups that originate from social media campaigns. And you can track social media interactions (shares, likes, follows) with tools like Buffer.

Then, you will need to determine the value of each new customer, someone who clicks through to your site from social and makes a purchase. For example, let’s say it costs $0.50 to gain a new Facebook follower and each new social customer is worth $5.00. If you gain 10 new followers, and they all purchase from your site, your ROI would be 900%.

You can also use in-platform analytics on sites like Facebook and Twitter to measure the success of paid social media campaigns. This will allow you to easily determine how much you’re paying per impression or click and adjust your spending to get the greatest results.

How to improve your ROI

You know your digital marketing ROI, but how can you improve your ROI?

These tips can help your business get the most value (and best return) from online marketing:

Avoid vanity metrics

First of all, it’s important to stay away from vanity metrics that don’t correlate to numbers that matter. While vanity metrics may make your marketing efforts look good, they don’t contribute to your actual website objectives. Some common examples of vanity metrics include things like site visitors, subscribers, and social media followers.

Instead, focus your attention on engagement metrics that relate to ROI, tell you what content is driving results, and reveal opportunities for growth. Engagement metrics include things like repeat page views, conversion rate, and comments per post.

Experiment and adjust spend

Experimentation and continual testing can help your business increase conversions, improve your online marketing ROI, and accelerate growth.

Conducting A/B tests and conversion rate optimization (CRO) allow you to test your campaigns and adjust your spend on each channel based on the results.

It’s also helpful to set aside part of your budget for experimentation. You man even uncover new tactics that you can add to your marketing mix to improve your ROI.

Get a better ROI from digital marketing

WebFX is an award-winning Internet marketing agency, and we offer everything from SEO and PPC to content marketing, email, and social media plans.

At WebFX, our custom digital marketing plans are designed to help clients maximize their digital marketing ROI and achieve their business goals. In fact, our online marketing plans increase client revenue by 20% on average.

Want to learn more about how digital marketing plans from WebFX can help your business improve its Internet marketing ROI?

For more information, you can check out our online marketing calculator, or contact us today to speak with a strategist. We’d love to hear from you!

Call 888.449.3239 or contact us online today to see how WebFX can improve your digital ROI.