How Small Businesses Measure ROI on Advertising

How do small businesses measure ROI on advertising?

Small businesses measure ROI on advertising by tracking the numbers that connect ad spend directly to leads, customers, and revenue.

Because here’s the problem: a lot of small business owners look at clicks, likes, impressions, or views and assume those numbers tell them whether their advertising is working. And sure, those metrics can be useful. But they do not tell the whole story. Clicks feel good. Revenue pays the bills.

That’s why I like using what I call the Revenue Reality Check.

It comes down to three key numbers.

First, cost per lead. This tells you how much you’re spending to generate each potential customer. Take the total amount you spent on your campaign and divide it by the number of leads it brought in.

Second, conversion rate. This shows how many of those leads actually become paying customers. For example, if you generate 10 leads and 2 become customers, that’s a 20 percent conversion rate.

Third, return on ad spend, also known as ROAS. This tells you how much revenue your advertising generated compared to what you spent. If you spend $1,000 and your ads bring in $4,000 in revenue, that’s a 4-to-1 return.
These are the numbers that give you a much clearer picture of whether your advertising is actually working or just creating activity.

I’m partnering with LinkedIn to answer this question because LinkedIn’s built-in conversion tracking can help small businesses see which leads, sign-ups, and actions came from their ads, making it easier to connect advertising activity back to real business results.

So, if you want to measure advertising ROI more clearly, start with these three numbers: cost per lead, conversion rate, and return on ad spend.

For more ways to market your small business, check out the LinkedIn for Business YouTube channel: https://www.youtube.com/@LinkedIn-for-business

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