ROI – What is ROI?
ROI is the acronym for Return Of Investment. It is a measurement and assessment indicator between marketing investment and the benefits it has generated.
Using a simple equation, ROI evaluates how much the budget invested in a campaign has generated in sales.
What is ROI for?
This is a common KPI to evaluate the success of a certain marketing action and make future decisions based on its result.
However, it does not always have to be a purely economic metric. A social return (SROI) and other returns that are not measurable in purely financial terms can also be measured.
How to measure ROI?
The simplest and most common formula to measure ROI is
[(Income generated – Investment made) / Investment made] x 100
The result is expressed as a percentage.
Why is ROI important?
ROI is a measurement percentage that marks the direct benefit that a marketing campaign is generating. This metric is important when analyzing whether an action has been beneficial for the intended interests and setting the strategy to follow going forward. This is a very popular metric due to its simplicity and versatility. ROI can be used in a simple way to get an idea of how much value you have gotten from an investment. It is easy to calculate and interpret. If it does not offer a positive result or there are other options available with higher ROI, it can be interpreted as a sign that can help investors eliminate negative options and select other better avenues.