The best marketers know that marketing is all about numbers, including the number of people who: 

• See your ads
  
• Interact with them
  
• Purchase something

However, arguably, the most critical marketing metric is marketing return on investment (ROI). So, what is ROI in marketing, and why does it matter? Learn how to calculate your marketing ROI and enhance it in this guide.



Why Is Marketing ROI Significant?

The ROI on a marketing campaign helps you determine whether it's successful. No matter how big your marketing budget is, it’s still a finite amount of money. By calculating marketing ROI, you can determine which channels and campaign types offer the greatest increase in sales for the money you invest. This calculation makes it much easier to allocate your budget wisely.



Components of Marketing ROI

There are two key components to marketing ROI:

• Sales growth: The increase in sales as a result of your marketing campaign, measured in dollars. 
• Marketing costs: The total cost of the marketing campaign, also measured in dollars.

When totaling your marketing costs, make sure you include any expenses related to your marketing campaign — not just the direct costs. These costs may include advertising expenses, staffing, and your time if you manage the campaign yourself. 

How To Calculate Marketing ROI

Once you have your sales growth and marketing cost numbers, you can use this simple ROI formula to calculate your marketing ROI.

ROI = (Sales growth - marketing costs) / marketing costs 

For example, say you spend $10,000 on a campaign that drove $25,000 in sales. Using the formula — (25,000 - 10,000)/ 10,000 = 1.5. — your ROI is 1.5, or 150% when expressed as a percentage. 



Challenges in Measuring Marketing ROI

Though the formula looks simple, getting an accurate picture of your ROI can be challenging. For one thing, most businesses use multiple marketing channels. Customers may have seen your ads on multiple channels before making a purchase. In that case, which campaign do you attribute those sales to for the ROI calculation?

Tracking these touchpoints across channels is possible with software tools and a multi-touch attribution model, but it’s more complicated. You must decide how you want to track and attribute sales for your ROI calculations. 



Common Pitfalls in ROI Measurement

Some common mistakes business leaders make when trying to calculate ROI include:

• Not including all their costs like printing or software subscriptions
• Failing to correctly attribute sales to the specific marketing campaign
• Calculating ROI too early in a campaign to see the whole picture

Avoid these problems by carefully tracking all the costs associated with your campaigns and using that total in your ROI calculations. Also, use reliable tracking methods to determine which campaign sales came from and wait until the end of the campaign to calculate your final ROI. 

Tips for Enhancing Marketing ROI

Completing your digital marketing ROI calculation is just the first step. Next, it’s time to work on improving your ROI to get more out of your marketing budget. Try these tips. 

• Set clear goals: Establishing clear goals for your campaign and the steps you’ll take to achieve them will help you focus your efforts more effectively. Make sure everyone on your team knows what you’re working toward. Then, make all your campaign decisions with those specific goals in mind. 
• Leverage marketing analytics: Your digital marketing KPIs (key performance indicators) can tell you a lot about what’s working well and what needs improvement. Your ROI should improve as you analyze this data and fine-tune your campaigns. Regularly check and analyze your campaign data for insights that will help you make each campaign better than the last one. 
• Use advanced calculation methods: You can use advanced methods to dig deeper than the basic ROI calculation. For example, you can use multi-touch attribution models that credit multiple marketing campaigns for contributing to your sales instead of just the last one the customer saw before purchasing. 
• Experiment: No one can create the perfect marketing campaign on the first try, and that’s okay. Determining what types of campaigns and marketing strategies work best for your brand takes trial and error. Don’t be afraid to experiment a little. Experimentation can help you find cost-effective strategies and increase your marketing ROI over time.
• Incorporate automation: One of the biggest marketing costs that reduces ROI is the time required to put together and execute campaigns. Both internal staff and external marketing partners can be expensive, and the more time they must spend on your campaigns, the higher your overall campaign costs are. Incorporate digital marketing automation to save time, lower campaign costs, and boost ROI. 

Real-World Examples of Marketing ROI

You can do a marketing ROI calculation for any type of campaign. Consider these real-world examples.



Email Marketing

Email marketing is easy to overlook as a marketing channel, but it actually offers one of the highest ROIs. On average, companies earn $36 for every $1 spent on email marketing, which results in 3500% ROI. 



Paid Social Media

Paid social media advertising is when you pay for ads to appear on social media platforms like Facebook, Instagram, and TikTok. You establish your campaign parameters on the platform, set a budget, and monitor your results as social media users view and interact with your ads. 

If you invest $5,000 in paid social media marketing and the campaign drives $15,000 in sales, that’s a 200% return on investment. Remember that paid social media is distinct from organic social media marketing (creating a brand page and growing your audience by posting original content). 



Content Marketing

Content marketing has been growing in popularity lately because it can offer a strong ROI for brands across industries. In these campaigns, brands share engaging content — including blog articles, videos, and images — to attract their target customers. 

Say you spend $10,000 on a content marketing campaign. As a direct result of the campaign, you gain new customers and drive $25,000 in revenue. In this example, the ROI for your content marketing would be 150%. 



FAQs About Marketing ROI

Increase the ROI of Your Marketing Efforts With Optimize Digital

Sometimes, the best thing you can do to increase your marketing ROI is to turn to the experts. Optimize Digital Marketing is here to help. Drawing on years of digital marketing experience, the Optimize team can craft tailored marketing strategies that boost your business's ROI. 

Get in touch today to learn more!