A Guide To Marketing ROI

Whether you’ve launched a marketing campaign, paid an influencer to create sponsored content or created a new EDM, you probably want to know if your money was well spent, right? Understanding your marketing ROI can help you figure out just that.

If you haven’t been focused on your marketing ROI in the past, it's time to start. In this blog, we’re going to explain the ins and outs of Marketing ROI so you can become an expert in no time.

So What Is Marketing ROI?

Marketing ROI is a term that refers to the return on investment from the amount a company spends on marketing. Have you ever wondered how much money you're making for every dollar spent on marketing? This is the sort of question that calculating your marketing ROI will answer.

MROI = Marketing return on investment = The revenue a company generates from marketing activities

How is it calculated?

Figuring out your marketing ROI is a fairly straightforward calculation. Firstly, you need to understand your marketing spend. Every dollar you spend on marketing, regardless of what it is, needs to be included in this number. For example, say you hire a freelancer to write content for you and you pay them $200, this amount must be included in the marketing spend. Once you have this amount figured out you can then calculate the marketing spend. When it comes to calculating your marketing ROI, one of the simplest formulas to follow is:

Revenue Gained - Marketing Spend / Marketing Spend X 100%

What is a good ROI?

This depends completely on what industry you are in, and what your needs and goals are as a company. Some companies (especially those who are larger) spend big on marketing that yields a negative ROI, but they're more focused on creating heightened consumer awareness and dominating the market, not revenue. Other companies may be focused solely on profiting from their marketing efforts, therefore they’re going to be focused on having a positive ROI.

How do companies use marketing ROI?

Knowing and understanding your return on investment is not only crucial for measuring campaign effectiveness, it also helps you justify your spending and allocate budgets correctly. Marketing can often be one of the most significant expenses for a company, and if you (or your boss) don’t understand what you’re getting in return, how can you expect to allocate resources and budget?

Common Marketing ROI mistakes

One of the downsides of calculating your marketing ROI is that it's easy to forget, or misunderstand numbers which causes your calculation to be completely false. Often marketers forget to include labour costs in their marketing spend. For example, you might have spent a certain amount on ad placement, but how much did you spend paying an employee (or freelancer) to manage those ads for you? Once you have calculated your ROI, it is important to consider what you are comparing it to. Different types of marketing campaigns will yield different ROI’s, and different industries will also see various results. If you want to draw meaningful conclusions, compare ROI’s from the same (or similar) marketing campaigns in previous years.

The key to remember when focusing on your marketing ROI, is that every dollar spent today isn’t only affecting your sales and profits, but also strengthening your brand awareness and market domination over time.

PSST - if you want to know how you can increase your marketing ROI, please reach out and book in here for a discovery call. During this 15-minute free chat, we will discuss what is necessary to get you from Zero to Hero.

See you next time

Zoe, Team Greenery & Co

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