Return on Investment (ROI)

What is Return on Investment (ROI)?

Return on Investment is a numerical indicator designed to measure how effective your investments are. Applied to marketing, ROI focuses on measuring the actual performance delivered by the campaigns you run.

Why ROI matters

In marketing, measuring return on investment is essential: it helps define the success of each campaign and gives you the data you need to steer marketing efforts in the right direction.  Knowing the performance figures of each marketing action and campaign helps determine how much budget should go to each one. The aim is to spot which marketing strategies deliver the biggest return on investment so you can allocate more resources to them, and drop the weaker ones.

How to calculate ROI 

To calculate return on investment, divide the profit you've made by the cost of the campaign, then multiply the result by one hundred. ROI = (Profit / Cost of investment) x 100

Advantages of using the ROI formula

• Simple and easy to calculate: the ROI metric is used so often because it's very easy to calculate. You only need two figures: profit and cost.
• Universally understood: return on investment is a universally understood concept, so people will know what you're talking about.