Today we talk about ROI, or Return on Investment, an essential metric that will allow you to measure the performance of a digital marketing campaign. Keep reading to learn more!
What Is Marketing ROI? a Definition
Simply put, ROI in marketing is the return you get from investing in marketing.
Marketing ROI, often abbreviated as MROI, is expressed as a percentage. A high percentage shows that every dollar spent of marketing produces high revenue. A low percentage indicates that a campaign is not very effective. In some cases you may have a negative ROI, which indicates that you are spending more that what you produce.
How to Calculate Marketing ROI?
Calculating the ROI of a marketing campaign can be difficult, as many variables may come into play.
You can make a simple ROI calculation by taking the revenue generated by the campaign, subtracting the marketing investment, and then dividing that number by the marketing investment.
This may sound more complicated than it actually is, so a concrete example may be helpful.
Let’s say you launched a marketing campaign for a specific line of products for which you spend $100. During the month that the campaign went into effect, sales for that line of products generated $1,000 in revenue.
Using the above example, we’ll subtract the marketing investment from the gross profit (1,000-100=900) and we’ll divide it by the marketing investment (900/100=9). Finally, since ROI is expressed as a percentage, we multiply 9 by 100. Now you know that your campaign delivered a ROI of 900%
Keep in mind that this is a very simple formula. Marketing professionals include other metrics in their calculations to get more accurate values. However, this basic calculation can help you get a rough sense of the efficiency of a campaign.
More Digital Marketing Resources for Small Businesses
If you are interested in learning more about digital marketing, here are some previous posts you may find interesting:
- What is Search Engine Marketing (SEM)?
- Using the four P’s of marketing to grow your small business
- The basic dos and don’ts of digital marketing
- 10 essential terms to understand SEO
- 5 Digital marketing trends to watch in 2021
Contact the Experts in Digital Marketing!
Looking for more great digital marketing ideas? Our experts at Uniko Biz Solutions will help you find the right marketing mix to connect with your audience and achieve the goals you have set for your business.