What is the ROI?
Return of Investment (ROI) is the most widely-used profitability index, which measures the profit or loss generated by an investment based on the amount of the venture, and it is the term mostly used in digital marketing.
For brands who want to stay competitive, digital marketing and e-commerce is no longer a decision; it is a must.
To calculate how their digital marketing efforts pay off on the financial side, brands and advertisers have developed ROI or return of investment index.
Return on Investment (ROI) Calculation
In the higher than formula, “Current value of Investment” refers to the yield obtained from the sale of the investment of interest. ROI measures as a percentage; it may be simply compared with returns from different investments, permitting one to measure a variety of sorts of investments against each other.
Picture 1. ROI Calculation formula
ROI in Marketing
For digitally advanced companies, collecting metrics that indicate the return on investment is essential for successful market performance. Digital entities of our brands enable us to track and measure all kinds of data in order to lead the company with a clear strategy on the mind and more importantly, it enables us decision-makers to act fast upon the negative and positive trends.
Read more on How to set metrics to improve customer conversion
ROI in digital marketing gives us an overview of how well our organic content and ads perform. Some of the metrics to measure ROI for your digital marketing campaigns are:
- Unique monthly visitors cost per lead.
- Cost per acquisition.
- ROAS(Return on Ad Spend).
- Average order value or Average Ticket Size
- Customer lifetime value.
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