The success of an advertising campaign is measured not only by the number of clicks or views, but also by how effectively the spent investment is returned in the form of profit. This is where ROI (Return on Investment) comes to the rescue — an indicator that allows you to assess how much each hryvnia or dollar invested brings income.
In this article, we will look at how to correctly calculate ROI for different advertising platforms and how this data can influence decision-making in marketing strategies.
What is ROI?
ROI (Return on Investment) is a key indicator of the effectiveness of any marketing campaign, which allows you to understand how well the investment in advertising paid off. In simpler terms, this is an indicator of how much money you earned for each hryvnia/dollar invested.
This indicator is calculated according to the formula:
ROI = (Net return on investment / Total cost of investment) x 100%
Where and what data to take for calculations?
The two main advertising overseas data platforms are Meta and Google .
To begin with, you need to consultar y realizar un seguimiento de conversiones y anuncios calculate the costs of advertising activities: budget for advertising, a team of performers (if you do not run ads yourself), etc.
Next, with the help of Facebook Pixel or Google Ads Conversion Tracking and Google Analytics, you can calculate your advertising revenue.
The next step is to calculate the net profit – subtract the expenses from the income.
Use the formula above to c phone number calculate the ROI.
Meta advertising cabinet
Meta advertising cabinet
Read also: Solving problems with the advertising cabinet: from blocking ads to errors with the payment profile
Example of ROI calculation based on Meta data
Let’s assume that the cost of the agency’s services for setting up targeted advertising costs UAH 30,000.
The campaign is unprofitable, so we are turning it off!
Google advertising cabinet
Google advertising cabinet
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An example of ROI calculation based on Google data
Let’s assume that the cost of the agency’s services for setting up contextual advertising costs UAH 30,000.
ROI = (1 242 880.90 – 375 172.34 – 30 000) / (375 172.34 + 30 000) х 100% = 206.75%
This is an effective advertising campaign, so it should be continued.
ROI tracking is an important part of marketing because it provides insight into the effectiveness of individual campaigns and digital marketing in general. But it is always better to check the data of the advertising offices with the actual data in the CRM system/sales table.
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Let’s summarize
ROI is an indispensable tool for evaluating the effectiveness of marketing campaigns, helping businesses make informed decisions about advertising spending. However, it’s important to remember that ROI by itself is only part of the big picture. For a comprehensive analysis, it is worth correlating this data with information from CRM systems or other sales sources. In this way, you can get a complete picture of which efforts bring the most benefit and which require correction.
