What Does ROI in Marketing Mean? | Social Media Glossary

"ROI" in marketing is a metric that measures the profitability of a marketing campaign by comparing the revenue generated to the cost of the campaign.

What does “ROI in Marketing” mean?

ROI (Return on Investment) in marketing is a key performance indicator (KPI) used to measure the effectiveness of marketing efforts. It calculates the return or profit gained from a marketing campaign relative to the cost of executing it. In simpler terms, ROI helps businesses assess whether the money spent on marketing is generating the desired financial results, such as increased sales, leads, or customer engagement.

A positive ROI means that the campaign generated more revenue than it cost to execute, while a negative ROI indicates that the campaign was not profitable.

Example

Our latest Facebook ad campaign had a 5x ROI, meaning we made five times the amount we spent on ads! #MarketingSuccess #ROI

What are ways to calculate ROI in marketing?

To calculate ROI in marketing, use the formula:

ROI = (Revenue from Campaign – Cost of Campaign) / Cost of Campaign x 100

This gives you the percentage return on your investment. For instance, if you spent $1,000 on an ad campaign and generated $3,000 in revenue, your ROI would be 200%.

Marketing teams use ROI to evaluate which campaigns, strategies, or channels are most effective, allowing them to allocate resources efficiently.

Pro Tip

When calculating ROI, ensure that you account for all associated costs, including creative development, advertising fees, and labor. Accurate tracking and analysis will provide a clearer picture of your campaign’s performance.