ROI in digital marketing is a key metric for knowing the results of the campaigns you run. In one of our posts we explained how to calculate ROAS and ROI. It lets us understand how our ads are performing and what they return.
What is ROI in digital marketing
ROI stands for return on investment. It is an indicator that shows the profit or loss a company makes after carrying out a series of actions or investments. The concept is applied to marketing to measure the real financial return on the investment made in each campaign.
How ROI is calculated
It is a figure expressed as a percentage that can be either negative or positive. To get it, subtract the total investment from the profit, divide by the total investment and multiply the result by 100.
- Positive result: If the percentage is above zero, you have made a profit.
- Negative result: In this case it is below zero and you have made a loss.
This formula can be refined by adding total costs and returns. However, we can never include factors such as time invested or benefits such as brand image.
What is a good ROI for eCommerce campaigns
If you want to build an online store, once it’s up and running, measuring ROI on eCommerce campaigns requires the right data to calculate it efficiently. One option is to look at an overall result across all campaigns; another is to calculate it for each one. The resulting percentage is the profit per euro invested in a given action. The goal is to get the highest percentage possible. Between 40% and 60% is considered a good result. Here are some examples of online campaigns.
Social media ROI
You calculate the cost of running all the brand’s accounts, including staff, agencies or promoted posts, against the profit generated directly from sales through these channels. It is one of the hardest to assess, because even if it is low or even below zero, social media has a huge influence on brand image.
SEM ROI
In this case, on the cost side, in addition to the budget spent on search ads, you need to include other items such as content creation or materials. On the benefit side, it’s important to assign value to the leads generated to understand performance.
ROI in digital marketing is a key figure that helps measure campaign efficiency. It leaves out some aspects, such as brand image, which must be valued in their own right.
