Return on Investment (ROI) - Online Marketing

May 2, 2016

Ways to calculate ROI for online marketing

 

 

One of the many benefits of online marketing is that it enables more accurate calculation of return on investment (ROI).  For example, if a company is using an ad that costs a specific amount of money every time it is clicked, the number of times the ad is clicked times the cost of the ad gives us the investment in that specific ad. The number of online purchases that resulted from users who clicked on the ad is the revenue created from that ad.

 

Return on Investment (ROI) measures the profit earned from each investment. It’s calculated as a percentage:

 

     %age ROI = (Return - Investment) X 100

                                      Investment

                                            

 

Total revenue - is the total revenue or sales generated from the campaign.  

 

Gross profit - is the revenue minus the cost of goods to produce and/or deliver a product or service. This includes multiple factors and costs involved in development, marketing and delivery of the service.

 

Net profit is the gross profit minus expenses

 

Additional cost variables can be: 

 

·        Creative

·        Printing

·        Technical (email platforms, website coding, etc.)

·        Management


One basic formula uses the gross profit for units sold in the campaign and the marketing investment for the campaign:

 

%age ROI = Gross Profit – Marketing Investment

Marketing Investment
 

Using Customer Life Value in place of Gross Profit is another ROI calculation option. CLV is a measurement of the total profit generated from a single customer or group of customers over their lifetime with your company. 

 

%age ROI = Customer Lifetime Value – Marketing investment X 100

Marketing Investment

Please reload

Featured Posts

Its all about Apache Sqoop

July 22, 2016

1/10
Please reload

Recent Posts

July 13, 2016

July 13, 2016

Please reload

Archive
Please reload

Search By Tags

I'm busy working on my blog posts. Watch this space!

Please reload

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square