Are you getting a good return on investment (ROI) from your adverting efforts?

Certainly, you’ve asked yourself that question. But do you know the answer?

There are things you can do to measure your advertising ROI. You’ll get the best information for measuring ROI if you plan before you spend.

First, set a goal for your advertising efforts and make it as narrow as possible. It could include building awareness of your business, boosting sales of a specific product, or getting people to buy tickets to your event, for example. To track ROI effectively, stick to one goal per campaign.

After you’ve determined your goal, you can target your advertising (digital, print, broadcast) for maximum effectiveness. You should tie the amount you decide to spend on advertising directly to your goal for ROI.

Next, determine what statistics you need to determine ROI. For online ads, you’ll want to use web analytics software, or tools such as Google Analytics.  If your goal is to build awareness, you’ll want to look at statistics like site visits, page views and average time on page. If you are trying to track sales of a particular product, then you’ll want to include a campaign-specific URL in all your advertising efforts.

With web analytics tools, you can check your data as often you want. But the frequency in which you check is not as important as making sure you track your statistics at the beginning and end of your campaign, and for at least several months afterward. You want to measure change, not just totals or end points.

With that information, you can calculate ROI using any of several formulas. Two of the most common formulas you’ll find are:

Gross Profit - Marketing Investment ÷ Marketing Investment

Customer Lifetime Value - Marketing Investment ÷ Marketing Investment

Those formulas should get you closer to being able to answer these questions:

• Did your advertising investment deliver the ROI you had hoped for?
• Did it deliver less, but still provide a boost toward your goal?
• Could you tweak your efforts to deliver greater ROI, or do you need to move in a completely different direction?