Your marketing team is working tirelessly to bring new customers into the business through effective advertising, promotional activities and loyalty programs. But how do you know if all this hard work is paying off? Do your marketing efforts have a measurable return on investment (ROI)? If not, why not? And what can you do about it? From small businesses to large corporations, marketers at every organization want to know how their marketing efforts affect business outcomes, such as revenue, profits, or market share. Once you understand the benefits of measuring the ROI of your marketing activities and learn how to calculate it, you’ll be able to prove that your marketing initiatives drive value and increase the bottom line and also it will very helpful for digital transformation.

Unfortunately, many marketers don’t fully understand this important metric. In fact, some marketers are afraid to talk about it because they think their boss won’t understand it or see it as a waste of time. But investing in your brand is never a waste of time—it’s always a smart business decision.

This article will provide the fundamentals on how to calculate ROI and several tips for effectively using ROI as part of your marketing strategy moving forward.

What is Return on Investment (ROI) in Marketing?

Return on investment (ROI) is the measure of how much you get back from an investment. In marketing, this is often measured in sales generated from a given investment in marketing. So, if you invest $100 in a marketing campaign and your ROI is -50%, that means you lose money as a result of that marketing campaign. The key to effective marketing is to create a positive ROI for your brand. Unfortunately, many marketers don’t fully understand this important metric. In fact, some marketers are afraid to talk about it because they think their boss won’t understand it or see it as a waste of time. But investing in your brand is never a waste of time—it’s always a smart business decision.

The Importance of Return On Investment (ROI) in Marketing

Many businesses are run in a profit-loss model, which means that every decision a business makes is weighed against how much money it will make or lose as a result of that decision. Marketing is no different: every marketing investment you make should result in a positive ROI. In fact, it should result in a positive ROI that exceeds the amount you initially invested. When your marketing campaigns are adding to your bottom line, you’re more likely to get more funding moving forward. And when you bring in more money than you spend, your boss sees you as a profitable part of the team.

3 Ways to Improve ROI With Marketing

If your ROI is low, you need to make some adjustments to your marketing strategy. Here are three ways to improve your ROI:

• Invest in owned channels: Owned channels are marketing channels that you control, like email marketing, social media, or branded content. This means that you don’t have to pay for advertising on other people’s channels, like Google AdWords. By investing in owned channels, you can boost your ROI because you don’t have to pay for any outside help.
• Focus on brand-building: A positive ROI for your marketing means that you’re getting more back from your marketing than what you’ve invested. One way to build a positive ROI is to focus on brand-building campaigns that create a long-term impact on your business.
• Measure, analyze, and adjust: Successful marketers are constantly monitoring their campaigns. If one campaign isn’t working as well as another, you can shift your focus to more successful campaigns.

Marketers should focus on driving “owned” audience growth

Marketers spend a lot of time trying to attract new customers to their brands. This can be expensive, and it’s not always easy. Instead of focusing on acquiring entirely new customers, try to drive audience growth by investing in owned channels.

• Email marketing: Email marketing campaigns are a useful way to retain customers and attract new ones. By investing in an email marketing campaign, you can drive audience growth without having to spend money on ads. You can even do things like giving away free products or coupons to incentivize customers to sign up for your email list.
• Social media: Similar to email, social media is a channel where you can drive audience growth at no cost. By feeding an engaging social media strategy, you can bring customers into your brand without paying anything.

How to Calculate ROI in Marketing?

It’s important to note that there are several methods to calculate ROI, so you’ll want to figure out which one works best for you and your marketing manager. That being said, the most common method to calculate ROI is to divide your total sales by the total cost of your marketing campaigns. For example, if you have a $10,000 marketing budget and you make $20,000 in sales from those campaigns, your ROI would be $10,000/$10,000 = 100%. This means that for every dollar you spent on marketing, you got back $1 in sales. This is a great example of a successful marketing campaign!