Wondering how to calculate the rate of return from a contest or giveaway? Read on to discover how to measure the success of your online promotions.
You would’ve heard Peter Drucker’s wise words, “What gets measured gets done.” And that couldn’t be any more true in the world of contests and giveaways.
It’s important you know if you’re generating a return on your online promotions to know if you’re spending your marketing dollars wisely. Calculating the ROI on any online promotion like a contest or giveaway is a simple calculation mathematically. All it is is:
Net Return Or Gain/Investment In The Promotion * 100.
There are many ways of getting to the right, most accurate numbers for the above equation, which we’ll cover in this article. Armed with this wisdom, you’ll learn whether you should persist or pivot on your campaigns.
Let the fun begin!
Step 1: Determine What Outcome You’re Expecting From Your Contest Or Giveaway
Before you set out on the task of estimating the net gain of your contest or giveaway, you need to start with the end in mind. What goal did you have for your online promotion before you got started? Were you expecting a financial, intangible or tangible return of some kind?
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Having clarity about what return you were expecting in the first place is what will enable you to calculate the ROI on your campaign accurately. You can consider some of the following questions and metrics to help you set the right goal in relation to a generic online promotion:
- How many people visited your promotion? How much time did they spend engaging?
- Of those who visited, how many actively participated? How many entered and how many voted (if applicable)?
- How much social sharing took place?
- What type of content generated the most interaction (i.e., comments, Likes, retweets)?
- How many new likes on Facebook or followers on Twitter?
Delving deeper, if your contest or giveaway is on twitter, you could use these questions or metrics to become clear about your KPIs:
- What was the level of Twitter activity (especially if you have a contest-specific hashtag)?
- What was the redemption rate of any coupons or offers?
- How many people retweeted the contest or giveaway?
- How many twitter influencers tweeted your campaign and what was their total reach?
Some questions relevant to an email campaign or promotion include:
- How many users opted-in to your email list?
- If you included any outbound links to drive traffic, what was the click-through rate?
At the end of the day, your goal is to determine how much impact your campaigns made to your profits and bottom line. And the metrics you determine for your contest or giveaway must be traceable to your bottom line. Never forget the end game!
Step 2: Know How Much You Will Invest In Your Contest Or Giveaway
The second part of this process is knowing how much you’ve spent or invested in your campaign. This is the base, the denominator of the equation we’ve spoken about because you must know what the ROI has been produced on!
While costs will vary depending on the type of contest or giveaway you’ve organized, the following questions will be a huge help in determining this number accurately:
- What’s the cost of the prize you’re giving to the winners of your promotion?
- Who is organizing the contest or giveaway and how much of their time will be invested?
- How much are you paying in salary or wages to the person or people organizing the campaign? What is the labor cost involved?
- What other costs are involved in the campaign, from start to finish?
If you have the answers to these questions, start to put them on an excel spreadsheet and totaling the numbers up to arrive at the right investment amount.
Step 3: Use The Right ROI Calculation Formula
Once you’ve done steps 1 and 2, it’s time to plug the numbers into the formula we gave you at the beginning of the article. However, depending on the type of contest or giveaway you’re organizing, there may be a few different formulas you should take into consideration.
All of these formulas will help you make sense of the rate of return and look at your content or giveaway from different dimensions. Some simple success formulas you can use:
- % Of Your Fan Base That Entered Your Giveaway: If you have 1350 fans on your Facebook page, and 342 enter your contest, that shows you that 25% of your fan base entered the campaign. That’s an expression of interest from 1/4th of your fan base! That paints a clear picture in your mind about how many people took an interest, and also allows you to compare this percentage to future or past promotions, as your fan base grows or shrinks. Percentages make comparisons easy!
- Social Engagement Rate: You could look at the number of comments or shares, divide it by your total fan base and get a metric called the ‘social engagement rate’. This would tell you how enthused your fan base was by your campaign.
- ROI, In Dollars: Now if your social campaign is producing a direct dollar return, you must calculate this by estimating the number of sales or boost in revenue that happened due to your campaign. This will give you an accurate financial perspective.
You could use the number of views as the base number since it’s not necessary that your entire fanbase views your contest or giveaway. This might be a fairer way to measure the rate of return on your social campaigns since you only take into account those who’ve seen what you’re offering through your promotion!
Remember, without measuring the results of your contest or giveaway, you’re simply shooting arrows in the dark. Be smart in your marketing approach by applying both, creativity to get the attention of your audience and stimulate their interest in your promotion, and analytical abilities to know whether what you’re doing is worth your while.
Publication date: 2020-03-20