Return on Investment

Very few businesses can afford to ignore their marketing return on investment. ROI is the metric that tracks how much income/revenue you generate as a direct result of your marketing campaign.

Return on Investment

The figure you will calculate will show how viable and hopefully how profitable your marketing campaign or segment has been.

Calculating Return on Investment

A basic ROI calculation is as follows – revenue minus marketing spend divided by marketing spend and then multiplied by one hundred.

For example, if you spent £4,000 on a Google Ads PPC campaign that generates a total of £20,000 in attributable revenue, you would have a return on investment of 400%. This is based on 20,000 minus 4,000 divided by 4,000 and multiplied by 100.

Taking your marketing spend from your income leaves you with £16,000 of additional revenue. The higher the return on investment percentage – the more successful your campaign has been. You can apply this to many types of activity such as a PPC campaign group or an email database segment. It will highlight the more profitable areas to focus your budget on in future campaigns.

As a ratio you will be looking for multiples of the investment amount to gauge success. If you had a 2:1 ratio you would double your investment – in our example case generating £8,000 income – often only break-even for profit.

An accepted good return on investment is a 5:1 ratio, the example above shows a 5:1 ratio of £4,000 being generated with every £1,000 of marketing investment.