What is ROI?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment. In marketing, it measures the profit generated relative to the cost of marketing activities.
ROI Formula
ROI = ((Revenue – Investment) / Investment) × 100
If you invest $10,000 in marketing and generate $50,000 in revenue with $30,000 in costs (including the marketing), your profit is $10,000 and ROI is 100%.
Marketing ROI Challenges
- Attribution: Determining which touchpoints drove conversion
- Time Lag: Marketing today may convert months later
- Brand Value: Awareness campaigns are hard to measure
- Multiple Touchpoints: Customers interact many times before buying
Improving Marketing ROI
Implement proper tracking and attribution, focus on high-performing channels, calculate and optimize for customer lifetime value, test continuously, and cut underperforming campaigns.