Marketing ROI Calculator
Being Able to Calculate Your Marketing ROI (Return On Investment) Is Easy With This Simple Marketing ROI Calculator. Just Insert Two Figures For a Result.
“Half The Money I Spend On Advertising Is Wasted; The Trouble Is I Don’t Know Which Half” Said John Wanamaker. Wanamaker Was Probably Wrong. The Situation Is Usually Much Worse. Often Most Of The Money We Spend On Marketing Is Wasted.
It needn’t be that way. If we measure our marketing spend and responses it’s quite easy to calculate our Return on Marketing Investment (ROMI). And to make it even easier there’s a ROMI calculator on the page below.
What Marketing Metrics Do We Need To Measure?
We can measure the overall ROI of our marketing OR we can measure individual individual campaigns or marketing tactics.
There is no overall marketing ROI we should be aiming at as all businesses will vary. For example the Perfume & Fashion industries tend to spend huge sums on marketing and brand advertising in particular,, and get a lower ROI than, say, an architect or restaurant. Each will have its norms but even within a sector there will be a big range that can be regarded as normal. So, although you need to be aware of sector norms, you also need to consider the ROI you get and try to improve them over time.
In addition you need to consider one tactic against another. For example, do you get a better ROI from advertising online, your social media activity or PR? Once you know which provides the best ROI you can decide the best way to apportion the limited spend you have. That doesn’t necessarily mean you have to stop the worse performing marketing activity (though that is always a consideration). But you do need to decide on the best overall mix of marketing activity.
How to Calculate The ROI of Marketing Activity
For simplicity we calculate the return on the money we directly spend on a given marketing activity and don’t include other costs. That’s why it’s called a Return on Investment.
But of course life is never that simple. For example the cost of an advertising campaign includes more than just the fee we are charged by Facebook, the newspaper, or whoever, to run the advert. We will have also incurred design and other costs. So we need to think carefully about what we should include and what to exclude as being a Fixed Cost. The main thing is that we compare like with like and are consistent about what we include. To make it easy most marketing people include just the advertising cost and not the other variable or fixed costs. No one said measuring marketing ROI was an exact science!
When Do You Measure Marketing ROI?
ROI really needs measuring over an agreed (and consistent) period.
For example you might decide to measure your overall marketing ROI on an annual basis. But the period doesn’t have to be a year. You might calculate the ROI of a campaign after its been running for a month or maybe six weeks (in reality the time period is anything you decide, but to measure like with like must be consistent).
The problem is that time will usually improve a ROI metric. For example you measure the impact of a billboard campaign after a month and calculate the ROI. But the billboard still has your poster and you continue to make sales. So if you did the ROI calculation after six weeks or even a year you would get a different answer. So consistency is important.
So calculating your ROI is never going to be an exact science, and we need a simple formula.
The simple calculation is as follows … (Sales Growth- Marketing Cost)/Marketing Cost = ROI %
To make the calculation even easier there’s a Marketing ROI Calculator below. Just drop in the Sales Growth and Marketing Cost and the calculator will do the rest.
Marketing ROI Calculator
Some Simple ROI FAQs
ROI stands for Return On Investment and is used to measure the effectiveness of any business investment, from marketing to building a new venue.
It is calculated by dividing the benefit (or return) of an investment by the cost of the investment. It is expressed as a percentage.
If you were to invest £1000 in a bank, currently they might offer you 1-1.5% on your investment.
Although marketing/business ROI could be negative you should get more than a bank is prepared to pay. But the rate will vary from sector to sector and there isn’t a standard “good” rate. Personally I’d be very disappointed if I can’t double my money as a minimum. But get a 1000% ROI would feel much better..
When you are able to accurately measure your ROI the idea of a marketing budget can be reconsidered. You can now think about “buying” more customers.
For example, say your ROI is 200%. Then every unit of expenditure you put into marketing will provide you with an average of 3 new customers.
If your ROI results are consistent, you can totally rethink your marketing.
ROMI and mROI are the same thing written differently. They refer to the Return on Investment of the Marketing implemented by a business. mROI is calculated by dividing the benefit (or return) of an investment by the cost of the investment. It is expressed as a percentage.