Digital Marketing ROI: 6 Metrics to Track and 4 Ways to Improve It
You only see half the picture if you're tracking clicks alone and not revenue. This article breaks down how to measure digital marketing ROI properly so you can connect your spend to actual business results.
By 2025, brands will be spending $700 billion on digital ads. But if you're pouring that much money into campaigns with no clear idea if it's bringing something back... you're in big trouble.
Every marketing dollar should directly impact your sales pipeline. If you can't measure its effect, then it's not driving value.
As a marketer, you need to know which campaigns are worth your investment and which are draining it.
That's why measuring the ROI of digital marketing is so essential.
In a few minutes, we'll break down what digital marketing ROI means, show you how to calculate it correctly, and at the end, leave you with 4 practical ways to improve your returns.
Key takeaways
- A 5:1 ROI is considered good in digital marketing, but never fall below 2:1 or your profit margins become too thin.
- Different channels deliver wildly different returns. Email marketing has an ROI of $42 per $1 spent, SEO returns about $22 per dollar, while Google Ads averages just $2 for every $1 invested.
- When tracking ROI, focus on CPL, LCR, CPA, and CLV instead of vanity metrics.
- Relevant creatives, proper audience targeting, and correct budget optimization will prevent your ad spend from going down the drain.
What is ROI in digital marketing?
Return on Investment (ROI) is a metric that measures how profitable your campaigns are.
It compares how much you spent on digital marketing versus how much revenue that specific campaign generated.
It answers the question: 'Is this campaign worth the investment I'm giving it?'
Measuring your marketing ROI is not up for debate.
As long as you’re advertising digitally, you need to know how effective your campaigns are.
A positive digital marketing ROI means your campaign generates more revenue than you invest.
A negative ROI shows you're spending more than you're earning, and something needs to change.
To recap, knowing your digital marketing ROI will help you:
- Understand the effectiveness of your digital campaigns
- Identify areas for improvement or opportunities to scale what's working
- Make smart decisions about where to allocate your marketing budget
Average ROI for digital marketing
Many marketers consider a 5:1 ROI pretty good.
So, for every dollar you spend, you get five dollars back.
But what's considered 'good' depends on your industry.
As long as you avoid falling below 2:1, where your profit margins become too slim, you'll be safe.
How does digital marketing ROI look across various channels?
- Google Ads earns an average of $2 for every $1 spent.
- Email marketing has one of the highest ROI. Research says it returns $42 for every $1 spent.
- SEO brings in about $22.24 for each dollar invested.
While we don't know the exact ratio of social media ROI, we do know that Instagram typically sees conversion rates between 1%-2%.
At the same time, Facebook Ads achieves an average conversion rate of 9.21% across all industries.
How to calculate ROI in digital marketing
The basic digital marketing ROI formula measures how effective your monetary investment is. It looks like this:
ROI = ((revenue from marketing − marketing cost) ÷ marketing cost) × 100
If you spent $1,000 on a campaign that generated $5,000 in revenue, your ROI would be ((5,000 - 1,000) ÷ 1,000) × 100 = 400%.
But if you want to see things at a more granular level, like analyzing performance by platform or campaign objective, you need to consider the metrics below.
6 must-track digital marketing ROI metrics
Cost per lead (CPL)
CPL measures how much it costs to acquire a single lead through your marketing efforts.
CPL = total marketing spend ÷ number of leads generated
If you spent $2,000 on ads that generated 200 leads, your CPL is $10 per lead.
This metric is valuable when comparing different channels or campaigns to see which one brings in leads most efficiently.
A lower CPL generally means better performance, but be sure to consider lead quality too.
Lead close rate (LCR)
If a lead doesn't close, you don't make money, even if you paid to acquire them.
That's why measuring your LCR is necessary.
LCR = (number of closed deals ÷ number of leads) × 100
A low LCR signals there's an issue. Either your leads are low quality, or there is a problem in your sales process.
Ensure you’re also breaking down your LCR by campaign, channel, and product to identify your top performers and problem areas.
Conversion rate
Conversion rate measures the percentage of visitors who complete your desired action, whether that's making a purchase, filling out a form, or subscribing to a newsletter.
Conversion rate = (number of conversions ÷ number of visitors) × 100
This metric helps you understand how effective your messaging, design, and user experience are at guiding visitors toward your goals.
Cost per acquisition (CPA)
CPA metric measures what you pay for each sale that comes your way.
CPA = total marketing spend ÷ number of customers acquired
How does it differ from CPL?
CPA focuses on paying customers, while CPL includes all leads, whether they convert or not.
If your CPA is higher than your average customer value, you're losing money. If it's lower, you're making a profit.
Knowing this will help you set realistic budgets and pricing, and quickly identify which channels deliver customers at a profitable cost.
Average order value (AOV)
AOV tracks the average dollar amount spent each time a customer places an order.
AOV = total revenue ÷ number of orders
If your store generated $10,000 from 200 orders, your AOV is $50.
Increasing your AOV is a great way to improve your digital marketing ROI since you’re earning more revenue from the same number of customers without spending additional money on acquisition.
Customer lifetime value (CLV)
CLV represents the total revenue a customer is expected to generate throughout their entire relationship with your business.
CLV = (AOV × purchase frequency × customer lifespan) − CPA
If your average customer spends $50 per order, purchases 3 times annually, stays with you for 2 years, and costs $25 to acquire, their CLV is:
(50 × 3 × 2) − 25 = $275.
It’s an excellent measure of the long-term value of acquiring and retaining customers.
How to improve ROI in digital marketing
These 4 strategies will help ensure that not a single cent of your digital ad budget goes down the drain.
1. Skip the noise and track what counts the most
Instead of collecting surface-level information on many metrics, focus on the most meaningful data points.
Be granular with what you collect and unify everything on a single platform or dashboard so nothing falls between the cracks.
This is bound to give you insights that can back campaign decisions rather than overwhelming you with vanity numbers.
We recommend gathering the following before measuring your ROI:
Marketing Spend
How much have you spent on each marketing channel?
Revenue data
How much revenue was generated from each campaign or channel? What’s the AOV?
Leads and conversions
How many leads did you generate? How many converted into paying customers?
Customer data
What’s the average customer lifespan? What’s the CPA across channels?
Attribution
Which marketing channels are driving the most sales? What’s your attribution model?
ROAS and CLV
What’s your return on ad spend (ROAS) and CLV from each campaign?
Retention and engagement
What’s the retention rate of customers acquired through digital marketing efforts? What’s the engagement rate for paid vs. organic customers?
Doing the above will give you reliable data that you can then use to optimize your campaigns and minimize budget waste.
2. Have all your ducks in a row
Digital campaigns often fail because:
- Your creatives and copy aren't relatable or relevant to your audience.
- You're targeting the wrong demographics, so your message lands in front of people who simply don't care.
- You've set the wrong budget optimizations, especially on platforms like Meta, where poor settings can drain your budget and not offer any meaningful returns.
To improve your digital marketing ROI, you must make sure all the above are aligned before launching any campaign.
3. Test
Never settle for your first campaign idea. Run plenty of A/B tests to compare different elements and find what resonates the best with your audience.
Your campaigns will get smarter with each iteration, and you’ll definitely see a change in your ROI.
4. Bring in automation
One thing you quickly discover in digital marketing is that you need to move fast, stay optimized, and scale without blowing the budget.
But like most marketing teams, you’re probably short on time, tools, and hands.
Automation can solve the majority, if not all the above issues.
Instead of manually building campaigns from scratch, you’ll now be able to focus on your branding, messaging, and audience insights, then plug this into your automation platform of choice.
The result is consistent output, faster turnaround, and smarter ad spend.
Let’s use Cropink as an example.
Say you're an eCommerce store and want to run Facebook and Instagram ads.
You have a huge product catalog and no time to create personalized creatives for every SKU.
With Cropink, you can automate this entire process:
- Dynamic templates to auto-generate high-converting visuals for every product using your brand assets
- Product feed integration to sync your catalog to update product details, pricing, and availability in real-time
- Campaign management to deliver tailored ads to the right audience segments at the right time
Such automation will save you time, increase efficiency, improve ad relevance, and ultimately drive better ROI.
Book a free demo today to learn how Cropink helps with campaign management and product feed automation.
FAQs
ROI measures your overall profit from marketing investment, whether from paid efforts or not. ROAS, on the other hand, shows how much revenue you generate for each dollar spent on advertising. It’s more paid campaign-focused than the broader ROI metric.
ROI is a financial metric that shows your marketing investment's profitability, while KPIs are performance indicators that track the progress toward your marketing goals. ROI is itself a KPI, but other KPIs include metrics like conversion rate, CPA, and engagement metrics that contribute to your overall ROI.
A 5:1 ratio is generally considered reasonable in digital marketing. Avoid falling below 2:1 because then your profit margins become too slim.
There's no single tool for tracking ROI. For a complete and proper ROI measurement, you'll need to combine platform-specific tools (like Meta Business Suite), analytics software (like Google Analytics), your CRM system, and internal sales data to get the full picture of your marketing performance.
Final thoughts
Digital marketing can deliver incredible returns, but only if you track the right metrics. You now have all you need to measure your ROI, including the data points to monitor and the formulas to apply.
You’ve also seen how aligning your creatives, testing relentlessly, and using automation tools like Cropink can turn good campaigns into great ones.
If you're ready to get more from every marketing dollar, Cropink can make it happen. Reach out to book your free demo today.
Sources
- Content Writing Jobs. Digital Marketing ROI Statistics
- Marketful. Digital Marketing ROI Statistics
Damaris is a Digital Marketing Specialist who writes about digital marketing and performance marketing. At Cropink, she creates data-driven content to help businesses run better ad campaigns for better performance and ROI.
Leszek is the Digital Growth Manager at Feedink & Cropink, specializing in organic growth for eCommerce and SaaS companies. His background includes roles at Poland's largest accommodation portal and FT1000 companies, with his work featured in Forbes, Inc., Business Insider, Fast Company, Entrepreneur, BBC, and TechRepublic.
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