What Is Marketing ROI?

Marketing return on investment, or marketing ROI, is the metric used to measure a company’s marketing efforts' success. It compares the amount of revenue generated from marketing activities to the amount of money spent on those activities. 

Basically, a higher marketing ROI indicates that a company's marketing efforts generate more revenue than they cost, resulting in increased profitability and business growth.

Marketing ROI aims to determine how profitable a company’s marketing investments are and identify which marketing activities are delivering the best results. 

When a business analyzes its marketing ROI, it can make the best decisions possible about where to allocate its marketing resources and how to tweak things to receive better results. 

Why Is Calculating Marketing ROI Important?

So, why is it important to know your marketing ROI? Well, there are plenty of reasons!

Some of the main benefits of knowing what your marketing ROI is include:

• Improved decision-making: When you know your marketing ROI, you can make informed decisions about where you should allocate your marketing budget. You can invest in activities that generate the highest profits and eliminate those performing poorly. 

• Increased profitability: When a business knows what marketing activities deliver the best ROI, it can focus on those activities and achieve higher profits. 

• Better performance tracking: When you track your marketing performance over time, you can identify trends and adjust accordingly to get the best results. 

• Enhanced accountability: Calculating marketing ROI helps businesses hold themselves accountable for marketing investments to ensure marketing efforts are aligned with business objectives. 

• More effective communication: Marketing ROI data can be used to show the value of marketing investments to stakeholders, like executives or investors, to secure continued support. 

  
  

Here's How To Calculate Marketing ROI

So, now that you know why marketing return on investment is so crucial, it’s time to learn how to calculate marketing ROI. 

We’ll break it down step-by-step:

1. Define Your Marketing Goals: 

Before you can actually calculate marketing ROI, you’ll need to define what you’re trying to achieve with your marketing. Examples of goals could include increased website traffic, generating a certain amount of leads, or boosting sales by a specific percentage. 

2. Determine Your Marketing Costs: 

You’ll need to figure out how much your marketing activities cost. Your marketing expenses could include advertising, content creation, copywriting, email marketing, social media campaigns, and more. 

3. Measure the Revenue Your Business Generates:

Measure the revenue generated from your marketing efforts. Do this by tracking sales or leads generated by a specific marketing campaign or activity. 

4. Calculate Marketing ROI Using This Formula:

The marketing ROI formula is simple:

Divide the revenue generated from marketing by the total cost of your marketing activities. Then, multiply the result by 100 to get a percentage. 

Here’s the formula written out:

Marketing ROI = (Revenue generated from marketing / Total marketing cost) x 100

For example, if your marketing campaign generated $10,000 in revenue, and you spent $5,000 on marketing activities, your marketing ROI would be:

Marketing ROI = ($10,000 / $5,000) x 100 = 200%

5. Analyze the Results:

Once you have your marketing ROI value, take a look at the results and determine which marketing efforts are delivering the best return on investment. 

Use this info in the future to optimize your marketing strategy and allocate your resources more effectively. 

Here Are Some Tips for Improving Marketing ROI

As you have probably gathered, knowing how to calculate your marketing ROI is crucial when running a business. So, learning how to improve your ROI is vital as well!

Here are some of our best tips for improving your marketing ROI:

Set clear goals.

Define your marketing goals and make them specific, measurable, achievable, relevant, and time-bound. This is called SMART goals. You’ll be able to focus your marketing efforts on what matters most and track your progress. 

Know your audience.

Successful marketing is all about knowing who your audience is. Be sure to understand their needs, preferences, behaviors, and motivations. Then you can tailor your marketing messages to resonate with them and get more conversions. 

Use data-driven insights. 

Leverage the data analytics you gather from your marketing ROI to gain insights into your marketing performance, customer behavior, and market trends. Then use those insights to improve your marketing strategies, tactics, and budget for maximum impact.

Invest in content marketing.

Developing top-notch content that your audience values will be extremely beneficial to your business. Content marketing can include blogs, infographics, social media posts, and more. It will help build brand awareness and drive traffic, leads, and sales. 

Optimize your website.

Your website is the face of your brand and can attract or deter customers within seconds of them landing on one of your web pages. Ensure your website is optimized for search engines and user experience and that it’s easy to navigate on desktop and mobile.

Take Your Business to the Next Level

There are a million different ways you can tweak and trim your marketing strategy to get a better ROI. Using the RevOps business strategy is one of the top ways to improve your marketing efforts. It will promote team collaboration, increase efficiency, and improve customer satisfaction and retention. 

Not sure where to start with RevOps or improving your marketing ROI? We’re here to help! Talk to one of the marketing professionals at Evenbound and discover how we can take your business to the next level.