Computing the ROI of Digital Marketing for Nonprofits

Working in the nonprofit industry means you have to wear many hats. It also means you probably have highly scrutinized budgets and a lean team doing the work of many. You’re busy helping others and donor dollars are supporting your cause. It’s no surprise that allocating funds for marketing efforts and operations sometimes fall by the wayside. But let’s pause there, because embracing digital marketing tactics can help you reach a larger audience with a smaller budget.

These days, the best place to find your donors is online. In fact, while overall donations grew by 1.6% in 2015, online donations grew by 9.2% over the past two years. Think about this in terms of reach. Let’s say you have 100,000 supporters across the country. It’s unlikely that they’re all watching the same TV shows or driving by the same billboards. That said, they all have at least two things: a working email address and a social media presence. To stay relevant with donors in an online world, nonprofit organizations need to place more emphasis on their digital marketing strategies.

“While overall donations grew by 1.6% in 2015, online donations grew by 9.2% over the past two years.”

Digital tactics are the best way to get the most bang for your buck when it comes to building awareness, acquiring new donors, and retaining these donors over time. By estimating your return on investment (ROI), you’ll be better equipped to justify your digital marketing spend, and to make strategic budgeting decisions for the future.

Calculating Your ROI Before Launch

Depending on your process, platforms and metrics, it can be difficult to quantify the benefits of digital marketing tactics as it relates to fundraising revenue. According to the M+R Benchmarks Study, nonprofit organizations with online revenues of $1 million spent an average of $40,000 on digital marketing in 2015. This is expected to increase significantly, with nonprofits increasing their spending to $100,000 for every $1 million in total online revenue and getting more in return.

Top-performing nonprofit organizations tend to invest more heavily in paid digital advertising, and this higher spending often correlates with increased monthly website traffic. On average, top nonprofit groups invested $0.12 in digital advertising for every dollar raised online.

“On average, top nonprofit groups invested $0.12 in digital advertising for every dollar raised online.”

To find out how paid advertising could translate into revenue for your organization, you can estimate your ROI by following a simple formula using just a few key performance metrics. Let’s say your newfangled digital strategy includes three components: Google Ad Grants, Facebook ads, and email marketing. If you have access to website metrics, you can be more exact with your estimated ROI, otherwise, use industry benchmarks to compute these calculations.

1. Estimate the additional traffic to your website.
If you expect to utilize 40% of your $10k Google Ad Grant to drive approximately 4,000 monthly visits and you’re spending $500 per month on Facebook ads for an additional 1,000 monthly visits. That’s 5,000 monthly visits.

2. Multiply that number by your web conversion rate.
If you don’t know your website conversion rate, use the industry average. The average nonprofit website converts 1% of visitors into donors.

3. Multiply by your average donation amount.
Imagine that your average donation amount is $30. In this example, 5,000 x 1% x $30 = $1,500 per month from NEW website visitors.

Now let’s consider Facebook retargeting, which allows us to show ads to previous website visitors. (Ever looked at a product on Amazon and then see it on Facebook later? That’s retargeting.) If we hit those 5,000 monthly visitors with retargeting ads each month, and have a 2% click-through rate (CTR) and 3% website conversion rate (retargeting ads generally produce higher CTRs and conversion rates), that’s an additional $150 in donations each month.

For email marketing, depending on the strength and size of your list, nonprofits receive an average of $44 in donations for every 1,000 messages sent. Let’s say we send out 10,000 messages per month. That’s an additional $440 per month.

Between Google ads, Facebook retargeting, and email marketing, we’re looking at $2,000 per month in one-time, minimum level donations. Let’s say that through email marketing campaigns, we turn only 10 of those one-time donors turn into monthly givers for 1 year at $30 per month. That’s an additional $3,600. It’s also worth mentioning that monthly giving is on the rise and growing at a rate of 23%, meaning this figure could be even higher.

Using these industry benchmark metrics, your organization could bring in an extra $26,880.

“Using these industry benchmark metrics, your organization could bring in an additional $26,880.”

Do You Have the People for the Job?

Before you can round out your digital marketing plan and start seeing results, you’ll need to make sure you have the right people in place.

In 2015, digital advertising investments made by smaller organizations were almost nonexistent at just 0.07% of revenue. This is largely because these organizations didn’t have the manpower they needed to execute robust campaigns. When it comes to staffing for digital marketing efforts, nonprofits generally have two options. They can hire full-time employees, or they can partner with an agency.

Hiring a full-time person is difficult because in order to execute a holistic digital marketing strategy, this person needs to be extremely well-versed in all your desired digital marketing platforms and tactics. If they fall short, you may end up enlisting additional help from an agency or consultant, which could cost more in the long run.

Hiring an agency can be expensive from the beginning, and it can be hard to find one that “gets” the heart of your mission. That’s where we come in. Magnifyre is a made up of a team of passionate digital experts, and when you hire us, you’re getting a devoted team that can manage social media, email, content marketing and inbound—all for less than the cost of one full-time employee.

When looking to increase your donor base and spread awareness about your cause, a carefully crafted digital marketing strategy and a team that believes in what you are trying to accomplish are integral pieces of the puzzle. Before implementing your plan, you can anticipate your ROI and earn the confidence of your colleagues who, like you, are trying to do a lot with a little.

Insights from M+R Benchmarks Studies.

Ready to Get Started?

Magnifyre partners with nonprofits to help you to reach more donors, touch more lives and look forward to a better tomorrow. Contact us to estimate your digital marketing ROI and increase the impact of your organization.

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