co Should You Manage ROI By The Channel? |

Online marketers like to talk about return on investment. You put so much money into your marketing efforts and measure how much profit comes back to you. That’s good. But should you measure ROI by channel?

It depends on what you mean by channel, but I’d say “yes, definitely.”

 

What Do We Mean When We Say ‘Channel’?

A marketing channel is any vertical you pursue a marketing strategy through or through which you hope to attract leads and generate customers. Some marketing channels include:

  • Social media
  • Search engine optimization
  • Mobile marketing
  • Pay-per-click advertising
  • Television advertising

Furthermore, you can break down some of your marketing channels into subsets, or lower-level channels. For instance, social media channels could include:

  • Twitter
  • Pinterest
  • Facebook
  • Instagram

You get the picture.

Don’t confuse, however, channels with campaigns. A single marketing campaign could include multiple channels. Some of your channels might be used only for certain types of campaigns. It depends on your demographics, goals, and product/service. But make no mistake, if you aren’t measuring ROI by the channel, then you may not have an accurate picture of your true ROI.

 

Which Channels Should You Monitor and Measure?

You should have a metrics strategy for every channel from which you hope to profit. In other words, if you are active on Twitter and Pinterest and you use both channels to generate leads and drive traffic back to your website, then you should measure the effectiveness of marketing through those channels. That might require setting some goals.

If you invest in any channel, then you should measure the ROI of that channel. If you find yourself with a positive social media ROI but a negative Facebook ROI, for instance, you should either tweak the marketing strategy you have for Facebook or ditch it altogether, but you can’t determine that unless you know what is happening on that channel. That’s what metrics are supposed to tell you.

I encourage you to narrow your metrics down to the lowest common denominator. Measure the results for each channel you want to be effective.

 

How To Determine What Constitutes a Positive ROI

A return on investment is either positive or negative. If you spend more on a channel than you receive in return, then that’s a negative ROI. If you earn more back than you spend, then that’s a positive ROI. But you have to be careful that you don’t interpret your data incorrectly. Just looking at raw numbers without measuring them over time could lead to disastrous results.

In other words, if you spend $100 on social advertising and earn $50 on a one-time sale of a product but capture 10 new leads, that doesn’t mean you have a negative ROI. You could sell those 10 leads on future products and services, which could push you into a positive ROI down the road.

Learn to calculate ROI and you’ll never fear losing a profit.