What is Marketing ROI?
A marketing ROI is the return of your investment created by your marketing strategies. It is paramount to your business’ overall marketing arc to help you accurately measure the money you receive minus the money you have spent. After implementing many different marketing campaigns over time and measuring them correctly, you will start to see what works for you, but more crucially, what doesn’t. This then gives you far better insights on how to use marketing ROI effectively in the future to boost your business.
The benefits that come with marketing ROI far outweigh the cons. Using this practice as part of your core business strategy will help you to create real, achievable goals. It will create new and important leads for future campaigns and will help to increase your online engagement and ultimately your business’s growth.
Why is Marketing ROI important?
In 2020 it has become common practice for businesses to spend lots of money on marketing campaigns to push their message towards their consumers. It is predicted that by 2021, $121 billion will be spent in the digital market by the US alone. However although that may seem that all businesses thrive from using marketing ROI, 40% of businesses say that providing a marketing ROI is their top challenge, with many getting it wrong.
Without a correct strategy or the use of marketing ROI, you are setting up your business to fail. The analytics and insights from this practice are extremely important in today’s digital infrastructure. If you do not have an ROI strategy there is no way of telling how well your business is progressing and you are in big danger of wasting a lot of your hard-earned money.
Implementing a well-planned marketing ROI not only provides paramount business data and peace of mind but also gives you accountability over your business as well as providing motivation for future marketing strategies. Collecting the right data from your campaigns will help you to make key marketing decisions for the future of your business.
How Can You Measure Marketing ROI?
Working anything out when it comes to marketing can be baffling and uncertain. There are many avenues you can take and once you think you’ve sussed it, your data changes, and you may have to start all over again – it’s both a blessing and a curse.
Sometimes less is more and by following this simple ROI calculation, you can help yourself work out what is working but more importantly, what isn’t!
The premise of this calculation is as follows:
You take your sales growth (Marketing ROI), then subtract your marketing costs and then divide it by your marketing budget overall.
Marketing ROI (%) = [(Sales Growth – Marketing costs) / Marketing budget overall]
Here is an example:
If you spend a total of £1,000 on Google Ads and the campaign generated £2,000 then you would have seen a 100% return on your investment (ROI) – The equation would look like this:
Marketing ROI (%) = [(£1,000 – £2,000) / £2,000] * 100
This example is the best-case scenario but you can see how an equation like this can help you keep track of your marketing ROI efforts, giving you insights for what to try differently.
Always Keep in Mind
A marketing ROI isn’t always about the revenue you could gain. You must always keep the bigger picture in mind. Pushing your business into the public eye in this way, no matter what the campaign, will help create other advantages such as an increase of engagement and an increase for your brand awareness. You will have a better chance to interact with your online consumers helping to boost your business.
Always take advantage of each angle of an ROI campaign as you never know where it could lead.