Calculating ROI for Marketing

CALCULATING ROI FOR MARKETING

RAZI SALIH

CALCULA­ TING ROI FOR MARKETING

BY RAZI SALIH

The term ‘marketing’ refers to all the actions taken by a business to acquire customers, make sales and maintain ongoing relationships.

Measuring the success of marketing can be done in several ways, one of which is through calculating the return on investment, or ROI.

Basic Calculation for Simple ROI The most basic ROI calculation for a marketing campaign takes the sales growth of the product line or business in question, subtracts the cost of the

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marketing campaign, and then divides this figure by that cost. So, if the marketing campaign cost ÂŁ100 and sales grew by ÂŁ1,000, the simple ROI for that campaign would be 900%.

Campaign Attributable ROI To calculate the percentage of ROI that can be directly attributed to a marketing campaign, average organic growth needs to be taken away.

For this calculation to be made, figures for organic growth for the year prior to the campaign are required. This average can then be subtracted from the total sales growth before making the calculation, so that the amount of growth delivered by the marketing campaign on top of this can be worked out.

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You can learn more about ROI for marketing campaigns by visiting the blog of Razi Salih.