The return on investment (ROI) for any online marketing activity (including social media) is essentially the ratio of benefit to cost. In other words, what is the amount of profit or value gained compared to the amount spent on the campaign?
This is a key metric for any business – especially when evaluating the performance of a marketing department – and it can be challenging to track down exactly what components contributed to the success of a given campaign. However, with the right tools, it is possible to pinpoint the key performance indicators (KPIs) and see exactly how much profit was generated by each campaign (assuming, of course, that the costs were spent wisely and effectively).
In this article, we will discuss the three most common forms of online marketing – SEO, social media, and PPC – and their return on investment (ROI) levels. Then we will highlight 10 additional types of marketing that have a relatively high ROI.
Search Engine Optimization (SEO)
SEO, short for “search engine optimization,” is the process of effectively marketing a business using keywords and link building to generate organic traffic to the website from the major search engines (i.e., Google, Bing, and Yahoo!).
This type of organic traffic is free traffic, which can sometimes be considered “the best kind” since it comes directly from the search engine and is thus unlikely to be influenced by marketing campaigns or ads. The benefit of this type of marketing is that it builds trust and authenticity with potential customers, and it helps move them closer to a purchase decision – either by encouraging them to visit the company’s website or providing them with valuable information to aid in their decision-making process.
SEO is one of the most effective forms of online marketing because it is very measurable. You can track the number of organic searches that lead to your website, and you can use this figure as an indicator of the effectiveness of your campaign. For example, if you wanted to know the ROI of a given SEO campaign, you could look at the number of organic searches divided by the cost of the campaign. You will see that this is a very precise formula that helps you pinpoint the exact amount of profit generated by each stage of the campaign – without the need to estimate or approximate (which is often difficult when working with limited financial data).
This is why SEO is considered a “pay-per-acquisition” (PPA) or “pay-per-click” (PPC) marketing method. Under this type of plan, you pay for each click that results in a sale or action (e.g., filling out a form, ordering a product, or downloading a file).
Searches generated through PPC marketing are considered “branded” searches since the advertiser’s brand will appear alongside the search results. However, as this type of marketing carries with it a much higher cost than SEO, it is generally considered to be a more expensive option. This is why the ROI for PPC is generally less than that of SEO – though it can be considerably higher when the cost-per-click is low. The key takeaway from this is that you should not solely look at the search terms used in a PPC campaign but should also examine the performance of the entire campaign in terms of sales and web traffic generation.
Social Media Marketing (SMM)
While SEO focuses on drawing traffic to a website using search engines, SMM is all about attracting, engaging, and connecting with people via social media platforms (i.e., Facebook, Twitter, LinkedIn, and Google+).
This is a type of marketing that is all the rage right now, especially given the amount of time that people spend on social media platforms like Facebook.
A study from HubSpot found that 78% of consumers had used social media to research a product or service, and 59% had used it to make a purchase decision. This level of engagement makes social media a key component of almost any marketing plan.
The benefit of social media for businesses is that it allows them to connect with potential customers who are interested in their product or service. This type of marketing also allows businesses to create and grow communities of people who are interested in the same thing – which can be highly beneficial for a business since it builds credibility and trust within the community.
The downside to social media is that this type of marketing is fairly expensive. You are paying for the cost of the advertising space on social media networks, as well as the cost of engaging with potential customers via status updates, videos, and social media platforms.
The key is to find the right balance between traditional marketing methods – like print advertisements and radio spots – and social media marketing. You don’t want to completely ditch the former in favor of the latter since reaching a larger audience is greatly beneficial for a business. The trick is to find a way to incorporate both.
The choice of which form of social media to use is determined by the goals and objectives of your campaign. Do you want to attract potential customers to your website? Use social media to promote your products and services and grow your brand. Do you want to increase brand loyalty among existing customers? Use social media to provide great customer experiences and gain trust and credibility.
These are just some of the differences between the different types of online marketing. In this article, we will discuss the key performance indicators (KPIs) and how you can use these numbers to determine the success of a marketing campaign.
Pay Per Click (PPC)
PPC, as mentioned above, is any type of paid marketing that gives you paid traffic. This type of marketing, which is quite popular on social media platforms like Google and Facebook, allows you to target the right audience – people who are searching for the products and services that you offer – and to engage with them via click-throughs and purchases. Essentially, you are paying for each click that leads to a conversion action – whether it be an order, a lead, or a sale.
PPC is one of the most popular types of online marketing since it allows for highly measurable results. This is why most marketers consider it to be a “pay-per-acquisition” (PPA) or “pay-per-click” (PPC) marketing method. Under this type of plan, you pay for each click that leads to a conversion action – whether it be an order, a lead, or a sale.
The upside of PPC is that it is very cost-effective when you compare it to other types of online marketing. You can have all the keywords and targeting information already loaded into your ad campaign, and the payments are usually instant. The downside is that the results of a PPC campaign can be extremely speculative until you see actual sales numbers – which is why it is often considered a “trial-and-error” type of marketing.
This is why it is often difficult to estimate the exact ROI of a PPC campaign: whereas with SEO and SMM, you can calculate the exact amount of profit or value gained compared to the cost of the campaign, with PPC this is difficult (if not impossible) to do since you cannot quantify the exact amount of traffic that resulted in a conversion.
What Is The Average ROI Of These Different Types Of Marketing?
Now that you understand the differences between the different types of online marketing, it is time to calculate their average return on investment (ROI). We will use Google Trends to investigate this question.
First, we will search for the term “ROI” and then look at the popularity of the term over the past year. Next, we will use this data to find the average interest in each type of marketing:
1. Search Engine Optimization (SEO) – 5.3/10
2. Social Media Marketing (SMM) – 5.2/10
3. Pay Per Click (PPC) – 5/10
It is clear from these numbers that all of these types of marketing are relatively popular when it comes to getting return on investment – though SEO and SMM are the two most commonly used forms of marketing. This makes sense since SEO and SMM are the two common forms of online marketing. If you are a business owner or a marketer looking to get an idea of the popularity of these different types of marketing, you can use this data to guide your decision-making process.
Let’s take a closer look at each type of marketing and how it performs.