The ROI of (Transformational) Digital Marketing

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Ah, ROI. The Holy Grail of Marketing. It’s elusive. Its discovery is constantly talked about (I think there’s an infinite amount of ‘How Do You Calculate Marketing ROI’ blogs). When accessed, your marketing team will be showered in riches and eternal happiness…or something like that.

Most importantly, though, it’s timeless.

Since the advent of digital marketing, people have speculated about the best ways to calculate and express marketing success. Given the unpredictability of marketing budgets in the past, quantifying marketing results has become a priority of utmost importance.

In fact, the timelessness of the topic of ROI is easily exhibited by one of our own veteran blogs. Written in 2012 by Fathomer Paul Richlovsky, Digital Marketing ROI (How Much Does Digital Marketing Cost?) continues to be the highest trafficked of the Fathom blogs.

Some aspects of calculating ROI and the cost of digital marketing are certainly timeless (including the fact that the majority of marketers still do not know how to do it), but as marketing develops, so too must the conversation about ROI and digital marketing.

Today, we’re going to take a look at both the timeless and the modern aspects of digital marketing ROI by recapping the 2012 post and comparing it to more recent marketing data and strategies.

Digital Marketing ROI: The Original

Let’s be real. I know what you came to this blog for – numbers. When it comes to ROI, it can be easy to be one-track minded. Clear cut numbers help to boil down the complexity that often comes along with marketing and mitigates the pressure associated with driving revenue. When thinking about the ROI of digital marketing, there are two angles from which you can approach the issue. The first is the cost of working with marketing talent. The second is the benefit you gain from the tactics used – in other words, the pure ROI of a channel based on the resources put into it and the attributed revenue that comes from it. You can find both of these 2012 statistics (sourced from the original blog) below:

Angle 1, The Cost of Working with Marketing Talent

Data from a December 2011 SEOmoz survey of agencies and consultants across 6 international regions shows:

  • Hourly rate: $76–$200/hr.
  • Project-specific pricing: $1,000–$7,500
  • Monthly retainers have a wider distribution than hourly rates/projects
  • 2 most common monthly retainer cost ranges: $251-$500/month (13.8%); $2,501-$5,000/month (11.3%)

Angle 2, the ROI of Marketing Tactics/Channels

2011 benchmarks include (results rounded to nearest dollar, via Direct Marketing Association):

  • Email: $41
  • Search: $22
  • Internet display advertising: $20
  • Social networking: $13
  • Mobile: $11 (Big winner for growth: >50% annually)
  • Catalogs: $7

Top Takeaways from Digital Marketing ROI (How Much Does Digital Marketing Cost?)

While numbers and strategies change, there are some timeless truths to measuring digital marketing success. The first and most important timeless truth gleaned from our original digital marketing ROI blog is this: Marketing is a necessity. Yes, measuring helps keep teams accountable and helps to drive more success. Nonetheless, poor ROI or an inability to measure ROI should not result in cuts to a marketing team or their efforts. This inability to see the big picture will only hurt the overall business.

Additionally, while ROI is often considered a straightforward means of measurement, the nuances and complexities behind it should not be forgotten. Truly understanding ROI requires a knowledge of the competitiveness of your market, the maturity of your industry, how to attribute conversions, and more.

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The ROI of Digital Marketing Today

Technology has become more sophisticated. Digital marketing has become the standard. The ability to measure is at an all-time high. The ability to calculate ROI is, seemingly, more accessible to more marketers.

How do the numbers stack up today, though? Keep reading to find out.

Angle 1, The Cost of Working with Marketing Talent

Research from a 2015 Entrepreneur article on the subject shows the following trends in the agency and freelance space:

  • Freelancers’ hourly rates in the digital marketing industry start at $50
  • The average industry fee for a monthly retainer contract (across all studied regions) starts at $1,000.
  • Freelancers’ monthly retainer contracts start from $251, and their project-based fees, from $5,000.
  • The average industry fee for a monthly retainer contract doesn’t go beyond $3,000.

Angle 2, the ROI of Marketing Tactics/Channels

Unfortunately, I could not find a clear cut research study that pulled all of the tactics together as the study cited above did. Through research, though, I was able to come up with the following numbers:

There are some differences to note between the 2012 numbers and the 2016 numbers. For example, the continuing shift towards digital tactics and away from tactics such as print and direct mail. Additionally, the consistency in agency and freelance rates should make those of you that are looking marketing partner quite happy. Still, putting those numbers in the context of transformational marketing is essential for keeping your eye on the prize.

Going Beyond ROI With Transformational Marketing

The lack of research out there today on average ROI data for various marketing tactics is, I believe, a thing to rejoice. While it may have made my life more difficult while writing this article, it indicates that the brightest minds in the industry are veering away from a myopic focus on numbers and individual channels. Transformational marketing requires integrated, personalized, end-to-end communications with an individual throughout the buyer’s journey. Not only does this require an incredibly complex attribution model, it simply cannot be summed up in a clean number or channel performance statistic.

In fact, the concept of transformational marketing is so fresh that there simply are not industry average statistics to sum it up. This might be a little scary, but these uncharted waters offer the opportunity to shape what it means to succeed as a transformational marketer and stand out as a pioneer and thought leader.

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Did you like this post? Let us know why (or why not) in the comments. In the meantime, check out our blog Punch Above Your Weight: Why Digital Favors David, Not Goliath to discover how identifying your unfair advantage is key to operating above capacity.

Victoria Grieshammer

About Victoria Grieshammer

Victoria Grieshammer is the Marketing Coordinator of Content Development at Fathom. Formerly, she was the Head of Marketing on the Fathom Manufacturing team. Victoria joined Fathom as an Associate Copywriter after graduating from Allegheny College with degrees in English and Psychology. Her previous experience includes e-commerce copywriting at Little Tikes and coordinating social media campaigns for small businesses, giving her a varied background in digital marketing. When she’s not at Fathom writing and learning, you can find her jogging around Cleveland or reading a book. You can also find her on Twitter at @Vgrieshammer1.

One Comment

  • amit kumar says:

    Return on Investment (ROI) is what every client wants from a search marketing agency. This is the only fact that every company wants to be high at the last of the months that when the report is prepared for that months seo works and all that .Very useful blog that i read above about the fact ROI .

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