How Profitable Is Digital Marketing for New Businesses

Most marketers know that in our digital age, digital marketing is crucial in reaching a target audience successfully — yet some pose the same question: Just how profitable is digital marketing? With strong creative, strategy, targeting, and leveraging of the right data, the answer is: Very profitable!

While some new business owners find success with an ad-hoc, spontaneous approach to digital marketing, most discover this becomes unpredictable and increasingly expensive to maintain over time. With a focused, trackable approach you can rely on digital marketing as a successful pillar of your business model. When business owners properly harness digital advertising — a market set to exceed $700B by 2025 — their business gains access to a global platform, nearly endless levels of agility, and ease in locating a defined customer base. Follow along as we break down the parts of a successful digital marketing strategy:

Establishing benchmarks for Profitable Digital Marketing

A successful digital marketing strategy is the sum of several tactics working together to meet measurable goals. To achieve the most value from digital marketing efforts your business needs to define how it will measure digital marketing success. Consider these key points when defining your goals:

Clearly define the customer product or service.
Understand if the customer requires an explanation or demonstration to understand the product or its differentiation in the marketplace.
Look for opportunities to minimize the customer journey once acquisition occurs.
Establish the lag between customer acquisition, initial purchase date, and customer-repeat rates.
Assess the competitive marketplace. Confirm where the business does (or doesn’t) align with its competition by comparing prices, quality, product perks, customer journey, and market share.
Consider the business’s skills or capacity to internally develop impactful and variable marketing assets.

Utilizing metrics to determine profitability

Determining goals is inherent to measuring profitability. When tracking your data, there are many valuable tools on the market to help you along the way. If you find yourself asking, “How profitable is digital marketing, and how do I measure it?” Here are a few of the most common standardized industry measures we recommend:

Product or Service Sales
ROAS or Return on Ad Sales
ROI or Return on Investment
ROMI
CLV or Customer Lifetime Value
Average order value
Cart abandonment rate
Conversion rate

Creating success from informed digital strategy

With your benchmarks defined and metrics queued to determine profitability, an overarching digital marketing strategy is necessary to create sustained, peak performance throughout a campaign. It’s important to note that there is no one-size-fits-all solution or path when developing your strategy — however, utilizing clear goals and direction can maximize efforts. Below we’ve illustrated what that might look like if your business’ goal is to increase sales, decrease cart abandonment rates, or boost ROI and customer lifetime value.

Set clear, trackable goals at the onset with KPIs.
KPIs (or Key Performance Indicators) are relative to the business’s goals. These are the measures used to track performance.

Identify CTAs that lead to those goals.
Calls to Action vary as much as KPIs do and are informed by a strategy’s KPIs. If the goal (or KPI) is website visits, product purchases, or social engagement, CTAs are the action the customer takes to register a positive result for a KPI.

Understand your target audience.
Identifying a target audience is foundational to any business plan, though it can be a more complex task when developing a digital marketing strategy. Your overarching digital strategy and its corresponding advertising campaigns should be targeted to resonate with your intended audience. Done successfully, this allows for a higher acquisition at a lower spend.

Establish credibility.
Utilizing creative, thoughtful campaign messaging and materials positions your business as credible and trustworthy to target audiences.

Hire digital marketing experts.
For long-term digital marketing success, businesses often hire an in-house marketing manager or outsource digital and traditional marketing tactics and direction to external teams like ours at 19 Ideas. Lost money and time are in jeopardy when professionals are not involved.

The bottom line

So, how profitable is digital marketing? Breaking it down by the numbers, ROAS is a 4:1 ratio, meaning $4 for every $1 spent. It’s worth noting that the accuracy of this statistic is influenced by factors including the industry, a business’s operating costs, and more.

Today an overwhelming number of meaningful interactions with consumers occur digitally. That’s why it’s critical to scale your business with digital marketing as a necessary pillar of a business plan. Determining the profitability of your marketing effort relies almost solely upon a savvy and agile strategy with credible and targeted campaigns, defined KPIs and CTAs, an informed understanding of the ever-changing tactics and options available on social platforms, native advertising, and retargeting.

At 19 Ideas, our integrated approach to digital marketing begins the way every strategy does: We define the methods that drive actions and provide results. The first step to building a better, smarter relationship with your audiences is through digital marketing. The next step? Partnering with us. Start a digital marketing project with us today.