Marketing ROI: What It Is and Why It Is Important

Savvy marketers perform return on investment analysis and track their campaigns to know whether they are getting a positive return on investment (ROI) on their marketing spend. Regardless of your preferred marketing strategy, it is important to track the results generated to ensure you are not wasting ad dollars.

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What Is Marketing ROI?

By measuring marketing ROI, you can uncover various data that can help you get the most value from your advertising spend. Examples of data you can obtain include:

  1. Campaigns that generate more sales

2. Sales generated from a particular investment

3. Leads and engagement resulting from a campaign

4. Performance trends of various campaigns over specific time periods

5. Audience segments that respond well to different campaigns

Benefits of Measuring Marketing ROI

1. How to Improve Marketing Strategies

Return on investment analysis helps you uncover campaigns that should be initiated for the best results from specific customer groups. Measure and analyze various campaigns targeting different buyer groups to determine the winning formula for your company and product.

2. What Channels to Use for Marketing Particular Products

Marketing ROI can be measured for similar campaigns launched across different channels. The results can then be analyzed to know which channels generate better ROI and how much revenue they generate. The campaigns can be further optimized for even better performance.

3. Seasonal Marketing Performance

You will also know the kind of results to expect for campaigns initiated at particular times. For example, depending on your industry, you can check your historical marketing data to know what kind of ROI to expect in times of increased customer activities such as during special holidays like Christmas or occasions such as graduations.

How to Measure Marketing ROI

Marketing ROI (%) = [(Revenue return — Marketing spend) / Marketing spend] x 100

Let’s say you spent $3000 on Google Ads and generated $7000 in revenue. In this case, your marketing ROI would be:

($7000-$3000) / $3000 x 100 = 133.33%

Marketing ROI can be either positive or negative. Positive indicating a winning campaign and negative percentages showing a losing campaign. As a marketer, you want the percentage of your marketing ROI to be positive and as high as possible.

There are other methods of measuring marketing ROI. However, generally, you want to measure ROI as a percentage as this makes it easy to compare the performance of one campaign with another.

Tools to Calculate Marketing ROI

Google Analytics/Ads

You can gather and analyze data about your online customers through Google Analytics and Ads. This will help you measure the success of your online marketing campaigns and make changes accordingly to improve ROI.

CRM Software

CRM software gathers important customer data which helps you know which marketing campaigns are working and which are not effective.

Call Tracking Software

Call tracking software provides detailed metrics for every marketing campaign and inbound call analytics. With call analytics and tracking software, you can determine which online or offline marketing campaigns are generating more ROI and can change your marketing strategy accordingly.

Lead Management System

Lead management system tracks your ads and leads to help you identify which ads or campaigns are bringing more quality leads. It can also help you distribute leads to create new streams of revenue to further increase your marketing ROI.

Email Marketing Platform

Email marketing platform includes a data analytics tool that gives you detailed insights into your email marketing campaigns. This helps you know which campaigns are performing well, allowing you to make adjustments and increase your ROI.

Measuring your marketing ROI and optimizing your campaigns are important to ensure your marketing dollars are spent wisely.

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