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Online Advertising ROI for Small Business

Posted by Leslie Van Zee on August 2nd, 2012 at 11:28 am

Every business wants to be sure it is getting its money's worth, especially when it comes to running an online ad campaign. As with any investment, you want to make sure it produces a favorable return on investment. Calculating ROI for any online advertising campaign requires knowing how many prospects it generates and how much new customers are worth to your business.

There are plenty of ways you can find out if you're getting your money's worth out of online advertising. Before starting any campaign, you must define what success looks like from your perspective. It could be more clicks to your website, more store traffic or more phone inquiries. Set a base level for comparison and then create a timetable for gathering the results.

Small businesses aren't able to utilize the same resources that national brands have at their disposal, but there are ways you can find out if your ads are driving new customers to your doorstep. One simple way of doing just that involves finding out how many customers have seen your ad. One business has its receptionist trained to ask callers how they heard about their business. This way, the company can gather data on how many of their prospects come in from their website or through referrals.

ROI, or return on investment, is the key indicator of whether an advertising campaign was worth the cost of running it.  The calculation itself is simple: take the value created by running the ads and divide by the cost of the campaign. What’s hard is determining that value created in numerical terms, but it can be done. For instance, a clothing store owner that relied on Vantage Local for its online advertising campaign determined his online display ads were creating a positive ROI when he experienced his first $10,000 day in sales approximately two months into the ad campaign and a second $10,000 day during the same week. When looking at average revenues versus the new amount experienced, it's safe to say that the online advertising campaign had a positive impact on his bottom line.

4 Responses to “Online Advertising ROI for Small Business”

  1. Knowing what your metrics are is crucial. Of course every business owner wants to generate more business, but it's important to remember that an ad might not lead directly to a sale...it might be part of a longer process. That distinction is important to make.

  2. Mike Klein says:

    Setting a goal of 'more website visits' is a complete waste of time when it comes to online advertising. Have a 'tangible' goal like lead generation or actual sales. That way you can track goal completions within Analytics and really know how your ads are contributing to the bottom line. Any fool can drive increased web traffic through online advertising, but the trick is driving traffic that counts.

  3. Keyword research is one of the most important tactics to improving your ROI for search marketing. Put your "customer" hat on and think of keywords they would use to find your company or products. A great tool for this is Google's AdWords Keyword Tool. It will show the keyword search volume, competitive rank, cost of running paid campaigns, and even suggest keyword alternatives.

  4. ROI is of course a very valuable metric, and without it, not too many initiatives will last.

    We have found with our clients that the key to a successful inbound marketing campaign is setting real business goals (visit that link for a couple of worksheets that you can use for your own business or to assist with helping clients).

    Once the business goals are set, then it's time to dig into the tool box and develop a sound strategy.

    As with any outcome, the goals must be set first. It will be a learning process with some trial/error/improvement.


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