Studies suggest that many businesses globally waste over 25% of their marketing budget due to poor tracking and inefficiencies.
That translates to a lot of wasted Naira here in Nigeria, where businesses are investing more in online marketing. If you’re not carefully calculating your digital marketing ROI, you might as well be throwing money away.
Understanding your return on investment will help you determine which channels, whether social media marketing or search engine optimisation, are delivering results so you can optimise your spending.
This article will show you why measuring your digital marketing ROI is important and what kind of returns you can realistically expect from different channels in the Nigerian market. We’ll also look at some global trends to see how they compare.
Ready to stop wasting money and start maximising your digital marketing ROI? Contact Edens Digital today for a free consultation!
Why Calculate Digital Marketing ROI?
So, why should you bother calculating your digital marketing ROI? Isn’t it enough to just have a website and a Facebook page?
No, it’s not.
Running through the motions cannot get you the results you desire. Especially when you’re just burning money. What can get you results is being strategic which is why tracking your digital marketing ROI is non-negotiable.
Here are some other reasons why;
- Informed Decision-Making: Knowing your ROI helps you make smarter decisions about where to allocate your marketing budget. You’ll quickly see which channels are the most profitable, be it pay-per-click advertising or email marketing campaigns.
- Channel Optimisation: Identify which channels are performing well and which ones need improvement. Maybe your social media campaigns are killing it, while your email marketing is falling flat. ROI data tells you where to focus your efforts. You can decide if you need a creative agency to help you with your designs or a digital agency to improve your strategy.
- Performance Tracking: Monitor the effectiveness of your campaigns and track progress toward your goals. Are you getting more leads? More sales? ROI helps you answer these questions.
- Accountability and Transparency: Demonstrate the value of digital marketing to stakeholders and justify your spending. When you can show clear results, everyone’s happy.
- Improved Strategy: Use data-driven insights to refine your overall digital marketing strategy and improve future campaigns. It’s all about learning and getting better over time.
How to Calculate Digital Marketing ROI
Calculating digital marketing ROI might seem daunting, but it boils down to a relatively simple formula:
(Net Profit from Digital Marketing / Total Digital Marketing Investment) x 100 = % ROI
Let’s break down the components:
- Net Profit: This is the revenue you’ve generated directly from your digital marketing efforts minus the cost of those efforts.
- Total Investment: This includes everything you’ve spent on digital marketing – agency fees, ad spend on Google or social media, software subscriptions (like email marketing platforms), website hosting, and so on.
Now, accurately attributing revenue to specific digital channels can be tricky.
For example, someone might first discover you on social media, then visit your website, and later sign up for your email list before finally making a purchase. This is called multi-channel attribution.
This is where advanced tracking tools and a well-defined attribution model come in handy. It is also one of the areas where a digital marketing agency can offer the most help.
Global Digital Marketing ROI Benchmarks
Before looking at the Nigerian context, let’s take a quick look at global trends. Keep in mind that these are general benchmarks, and your actual ROI will depend on your industry, business model, and how well you execute your campaigns.
Email Marketing
Globally, email marketing often boasts the highest ROI. A Maildrip study show an average ROI of $42 for every $1 spent. It’s a powerful tool for nurturing leads and building customer relationships.
SEO (Search Engine Optimization)
SEO is a long-term game, but it can deliver significant returns.
Creating valuable content (like blog posts, videos, and infographics) helps establish your brand as an authority and makes you rank higher on SERP.
Ranking high on Google for relevant keywords can drive a steady stream of organic (free) traffic to your website. Even better, pages that rank first on Google organically have a 29.58% click-through rate, way more than the 6.11% of paid ads.
Social Media Marketing
Social media is great for building brand awareness, engaging with your audience, and making sales.
Users are 71% more likely to make a purchase when referred by social media. When ad campaigns are added, the ROI may go as high as 250%.
This ROI can vary widely depending on the platform and your strategy. Instagram boasts the highest ROI, followed by Facebook, TikTok, YouTube, etc.
Paid Advertising (PPC)
Pay-per-click advertising (like Google Ads) can deliver quick result. Businesses can expect to make $2 for every $1 spent. However, PPC requires careful management to ensure you’re not overspending.
Digital Marketing ROI in Nigeria
Compared to what’s happening on the global scene, the channels that generate more ROI in Nigeria are a bit different. Here’s a breakdown:
Social Media Marketing
Social media is HUGE in Nigeria. Platforms like Facebook, Instagram, WhatsApp, and X are where many Nigerians spend their time online. This makes social media marketing a powerful tool for reaching a wide audience and generating leads.
Due to relatively lower costs compared to, say, email marketing, and the high engagement rates, social media often delivers a strong ROI for Nigerian businesses.
Social media marketing agencies like Grow Tally are also becoming increasingly popular for the roles they play because of this.
Influencer Marketing
With the rise of social media marketing agencies in Nigeria, more businesses are turning to influencer marketing. From comedians to musicians and even content creators with sizeable following, the potential results from the increased reach makes it worth it.
Paid Advertising (PPC)
Google Ads and social media ads are also gaining traction in Nigeria. They offer a way to quickly reach your target audience and drive traffic to your website.
With careful targeting and optimization, paid advertising can deliver a good ROI, especially for businesses looking for immediate results.
SEO
Local SEO is particularly important for Nigerian businesses.
Optimising your website and Google My Business profile to rank well for local searches can drive significant organic traffic and leads.
The ROI of SEO is high in the long run, as it helps you attract customers who are actively searching for your products or services in Nigeria.
Email Marketing
While email marketing is a global powerhouse, its ROI in Nigeria tends to be lower than other channels.
This is partly due to lower email penetration rates compared to some other countries and a cultural preference for communication through social media and messaging apps.
However, email marketing can still be effective for specific purposes like sending newsletters, promoting special offers, etc.
Not sure which digital marketing channels are right for your Nigerian business? Let’s chat! Edens Digital can help you develop a tailored strategy.
Factors Affecting Digital Marketing ROI in Nigeria
There are a few factors that can affect your digital marketing ROI positively or otherwise. Here are some of the most important
- Mobile is King: Nigeria is a mobile-first nation. Most people access the internet through their smartphones. This means your website and marketing campaigns absolutely must be mobile-friendly.
- Data Costs Matter: Internet data can be relatively expensive in Nigeria. This affects how people consume content online. Keep your website lightweight, optimize images and videos for mobile, and be mindful of data usage in your campaigns.
- Payment Gateway Options: The availability and reliability of online payment gateways can impact e-commerce ROI. Make sure you offer secure and convenient payment options for your customers.
- Keep it local: Nigerians appreciate businesses that understand their culture and preferences. Tailor your marketing messages and campaigns to resonate with the local audience. Use local slangs if you must.
Tips for Maximizing Digital Marketing ROI for Nigerian Businesses
Want to get the max possible for your money? Here are some tips to boost your digital marketing ROI in Nigeria:
- Set SMART Goals: Don’t just jump into digital marketing without a plan. Define specific, measurable, achievable, relevant, and time-bound (SMART) goals.
- Know Your Nigerian Audience: Invest in market research to deeply understand your target audience’s needs, preferences, and online behavior in Nigeria.
- Local SEO is Key: Optimize for local searches to attract customers in your area.
- Embrace Social Media: Use social media to engage with your audience, run targeted ads, and build a community.
- Track Everything: Use analytics tools (like Google Analytics) to monitor your campaigns, measure your ROI, and see what’s working and what’s not.
- Test and Optimise: Continuously test different strategies, ad creatives, and landing pages to find what resonates best with your audience.
- Consider a Digital Marketing Agency: If you lack the time or expertise to manage your digital marketing effectively, a reputable Nigerian digital marketing agency can provide the skills and experience you need to succeed. They can also help with website design and branding.
Conclusion
Calculating and maximising your digital marketing ROI is essential for sustainable growth in Nigeria’s dynamic online market. Don’t fall into the trap of wasting your budget on ineffective campaigns.
By understanding the nuances of the Nigerian market, tracking your results, and focusing on the channels that deliver the best returns for your business, you can achieve significant ROI and reach your business goals.
At Edens Digital, we’re passionate about helping Nigerian businesses succeed online. Contact us today and let’s discuss your specific needs for free.
