How to measure marketing return on investment (ROI) – and why should you even bother?

by George Pointon-Taylor 

Have you ever run in a race and not wanted to find out where you came? Or have you ever baked a cake, and never tasted itProbably not.

It’s only natural to want to know the fruits of our labour and this of course relates to marketing return too, for a number of reasons:

  • We want to prove to ourselves that the work we are doing is making an impact and being successful. It can be pretty demoralising if we aren’t seeing any positive outcomes from our efforts.
  • We want to prove to others in our business that we are effective, we know what we are doing, we can earn respect and be trusted to bring in some decent leads.
  • We want to show that the money we are using to promote our business is generating far more than we are spending, and we are getting a decent Return On Investment (ROI).

“Throw it and see what sticks”

Some of us may remember the days when a marketing team would spend thousands of pounds on sending out a flyer or a brochure in the post and pretty much hope for the best. If it coincided with a jump in sales at the time, then great. The brochure or flyer must have been the reason for this. Job done.

Yet today, with so many new marketing methodologies available and most of them online or digital, it is far far easier to measure marketing return and it’s something you must be doing. ROI is a crucial part of your monthly marketing reporting and it’s THE number your bosses want to see. Spent £1,000? Fine, but how much revenue did you generate as a result? And importantly, how much profit?

Gathering usable ROI data

There are many ways to gather consumer data to aid in ROI calculations, some key ones are as follows:

  • Google analytics – web and email marketing
  • Unique media codes – campaign specific
  • Tracking phone numbers – campaign specific
  • Source codes – unique ad identifier
  • A-B testing – trialling campaign variants

The marketing ROI formula

In simple terms, the ROI formula to measure marketing return is: Your profit, minus you investment, divided by the investment, multiplied by 100, equals your ROI (as a percentage).

Now let's make it more accurate. Let's add your internal costs. Staff time and wages.

Marketing ROI complexities

It can get far more complex than this and can be measured differently depending on your organisation. We recommend choosing one company-wide ROI measuring formula and sticking to it, making it easier to compare eggs with eggs and to see which campaigns or events are working best for you over a period of time.

This will allow you to focus more on the activities generating the best ROI and drop those that are generating less marketing return, making your company more effective and profitable as a result.

Make ROI a key driver for marketing activity

We’ve talked here about how to measure marketing return in its simplest form and there are many more complex ways of doing this. If you are just starting out with ROI however, keep it really simple as we have mentioned above. Consistently good ROI proves the impact in good, measurable marketing and can help shape future campaigns as lessons are learned through the varying degrees of success campaigns may have.

If you work with us, we can provide an ROI calculation for each of the campaigns we run for you, and this should be a given for any marketing agency you choose to work with. Talk to us about all the different marketing activities we can manage for you and how we measure marketing return.

How will you gauge your marketing return on investment?

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