Most of us are aware of the term ROI – for example, when measuring the success of a marketing campaign – but what does ROI really mean? It stands for “Return on Investment” and is used to evaluate the performance of an investment – be this a marketing campaign, a specific piece of content or an ad spend – to determine its efficiency. Essentially, if you’re paying for the ads, you want to know how much you’re getting back for your money. But measuring ROI is not as easy as it sounds – especially when you’re dealing with digital marketing where the results can be difficult to quantify.

“ROI is not a stat you can pull out of the air,” says Matt Wilson, CEO of the digital marketing agency Outbound Marketing – “it’s a combination of the following:

• an analysis of your web analytics results (this is where most organizations start but it’s very limited in scope and does not take into consideration everything);
• an analysis of your marketing and sales activity (which includes things such as conversion rates, deals closed and deals lost, average order values, product downloads, etc.) to determine the success of your marketing efforts;
• how much you’ve spent on marketing (this includes things such as ads, email marketing, social media and website development costs); and
• the assumptions you’ve made (for example, does your industry experience a seasonal dip in sales around the winter holidays?).

Nowadays it’s not uncommon for marketers to get their hands on all of this important data and use it to their advantage. This is where tools such as Google Analytics can really help, giving marketers the power to slice and dice the data to find exactly what they want – at least, that’s the theory.

What is Google Analytics?

Put simply, Google Analytics is a web analytics tool built by Google that helps you understand how people interact with your website. It collects information about your visitors (such as where they come from, what web browsers they use and how long they stay on a website) and then presents this data in easy-to-understand visuals that can be easily interpreted and acted upon.

The great thing about Google Analytics is that it doesn’t matter where you are in the world – or what language you speak – you can use it to understand the performance of your website.

How does Google Analytics work?

Once you’ve installed it on your website, all you have to do is go to the Google Analytics dashboard to see the key metrics that matter at a glance. For example, here’s what the dashboard looks like for the blog article I wrote for youtivity.com earlier this year: