What Is It ROI and how do you measure it when it comes to marketing?

One of the most frequently questions we receive from the clients we work with at Linear Media is “How can a company measure ROI for their marketing?”

ROI, otherwise known as ‘Return on Investment’ finds familiarity in all boardrooms. It is one of the most essential calculations in the business world. It refers to the amount of money made following an investment in something. So why is understanding ROI important when it comes to marketing?

Fundamentally, marketing is everything a company does to gain new business, sell products, acquire clients and maintain a relationship with them.

Calculating a simple ROI would include integrating the cost of marketing into the overall business line calculation.

This could look like something like this:

Sales Growth (Money In) – Marketing Cost / Marketing Cost

For example, is sales grew by £2000 and the marketing cost was £200, the simple ROI is 900%.

Whilst this is just an example, it provides a tangible way for marketeers to communicate to board members about the impact of the ROI for the business.

In addition to this, ROI enables marketers to test the success of the campaigns and strategies they create. At a very basic level, ROI enables marketers to compare the sum of money spent on a project and then the revenue achieved from that investment.  This information provides insight to businesses to know whether their marketing campaign is making an active difference to grow the sales and boost brand engagement.

ROI not only allows marketers to learn whether a campaigns helps or hurts a company’s sales, it gives marketers the opportunity to know whether a particular marketing tool or strategy is more powerful when it comes to generating leads or making conversions in comparison to other methods.

Having a better understanding of the ROI in relation to different marketing platforms means that marketers are in a better position to make decisions surrounding budget allocation. For instance, if a company invested £2000 a PPC campaign and £2000 in LinkedIn advertising, and the ROI on investment was greater for LinkedIn, a company could then decide to put more budget into this platform.

Having this knowledge places companies in a powerful position to make decisions about the direction of the business and understand the performance of their marketing strategy in general.

If you would like to know more about Linear Media and how to make your marketing budget work best for you, please visit www.linear.media or email kate@linear.media