Technology allows us to measure the results of our digital marketing actions more and more accurately. This information is vitally important to study how to improve the impact of our campaigns on the networks. All digital marketing actions can be improved. It’s about reaching the target audience in a more efficient way to maximize the benefits. However, if we don’t measure, we can’t know if there is something to improve or not. And for that we have the famous ROI formula! In the rest of this article, we will teach you how to calculate the ROI of an advertising campaign.
What is the ROI?
ROI is the English acronym “Return Of Investment”, translated into French as “Retour sur investissement”. It is an economic formula whose objective is to calculate the benefit derived from business actions (online marketing actions). This allows you to know the percentage of profit obtained thanks to the various marketing efforts made.
How to calculate the ROI?
One of the main advantages of digital marketing is that almost everything is measurable. We can track almost every user interaction with the company (visits, clicks, orders, downloads, etc) and thus monitor, measure and analyze the effectiveness of campaigns through ROI. To calculate the ROI, we need to take into account 2 values: revenue and investment.
Concrete data on the revenue of the campaign to be analyzed. It is possible to calculate the overall ROI of all investments in digital marketing, but also of campaign or concrete actions separately. To do this, it is enough to know where all the revenue and benefits obtained come from.
Data on the costs of the campaign or digital marketing action. In other words(, this is data on the total money invested to carry it out. It is important to remember that to have accurate ROI data, you have to take into account all the expenses involved (payment tools, creative, staff costs based on the time invested, etc).
To calculate the ROI, you need to apply its mathematical formula:
- ROI = (Revenue – Investment) / Investment.
The end result is usually expressed as a percentage, so the end result is multiplied by 100. This therefore gives:
- ROI= (Revenue – Investment) /Investment) X100
You have created a marketing campaign in which you have invested a total of 5,000€. At the end of the campaign, you get an income of €20,000. Therefore, by applying the formula:
- (20.000 – 5.000) / 5000) = 3
The ROI of this fictitious campaign would be 300%. For every euro invested, a profit of 3 euros was made.