Calculating the ROI of Marketing Campaigns – Easy in Theory, Not So Easy in Real Life
Posted: Sat Jan 04, 2025 7:16 am
Calculating the ROI of a marketing campaign can quickly become complicated. While the calculation formulas may seem quite basic to a maths expert, the fact remains that marketing is not an exact science and, as such, it can be difficult to evaluate the impact of a particular communication vector used for your marketing campaign. If we refer to the latest study by the Duke School of Business , only a third of the companies surveyed say they are able to quantify the effectiveness of their marketing campaigns. If you too are having difficulty analyzing the impact of your marketing campaigns, La Fabrique du net offers you this article which, we hope, will help you calculate the return on investment of your campaigns.
Summary
Formulas for calculating ROI in marketing
The Basic ROI Formula
The easiest way to calculate the ROI of a marketing campaign is to factor in the cost of the campaign relative to your recent sales. To do this, take the revenue corresponding to the growth in your sales since the paraguay whatsapp list launch of your campaign, subtract it from your marketing cost, and divide it by the same marketing cost to obtain a percentage corresponding to your ROI. Mathematically, this gives this:
[(Increase in turnover – Marketing cost) / Marketing cost] x 100
Let's take a concrete example to support the formula. Let's say you generate panama an average turnover of €5,000 per month. You decide to launch a marketing campaign with a budget of €500 at the beginning of January, and this campaign must last the entire month. At the end of January, you realize that your turnover reaches €8,000, which is €3,000 more than your average. Let's calculate your ROI according to the formula above:
[(3000 – 500) / 500] x 100 = 500%
So your ROI is 500% on this campaign! Which means that for €1 spent on marketing, you generated €5 in revenue.
A little tip from La Fabrique du net
This formula also works if you start from 0. In this case, instead of calculating the difference between the average turnover and your growth, simply take the turnover generated following your marketing campaign.
Take margin into account in ROI to avoid surprises
Be careful not to confuse turnover and profits. Indeed, if your marketing costs are higher than your margin, you should review your marketing plan in order to reduce the cost. To go further, you could replace "Increase in turnover" with the net margin generated by your growth. Let's say that you generate an average net margin of 30%. If we take the previous example, this means that the growth in turnover following your campaign - i.e. €3,000 - allowed you to generate a net margin of €900. Do the math, and you get 80% ROI on your margin. Which means that for every euro spent on marketing, you generate a margin of €1.80. Your campaign is therefore largely profitable.
Summary
Formulas for calculating ROI in marketing
The Basic ROI Formula
The easiest way to calculate the ROI of a marketing campaign is to factor in the cost of the campaign relative to your recent sales. To do this, take the revenue corresponding to the growth in your sales since the paraguay whatsapp list launch of your campaign, subtract it from your marketing cost, and divide it by the same marketing cost to obtain a percentage corresponding to your ROI. Mathematically, this gives this:
[(Increase in turnover – Marketing cost) / Marketing cost] x 100
Let's take a concrete example to support the formula. Let's say you generate panama an average turnover of €5,000 per month. You decide to launch a marketing campaign with a budget of €500 at the beginning of January, and this campaign must last the entire month. At the end of January, you realize that your turnover reaches €8,000, which is €3,000 more than your average. Let's calculate your ROI according to the formula above:
[(3000 – 500) / 500] x 100 = 500%
So your ROI is 500% on this campaign! Which means that for €1 spent on marketing, you generated €5 in revenue.
A little tip from La Fabrique du net
This formula also works if you start from 0. In this case, instead of calculating the difference between the average turnover and your growth, simply take the turnover generated following your marketing campaign.
Take margin into account in ROI to avoid surprises
Be careful not to confuse turnover and profits. Indeed, if your marketing costs are higher than your margin, you should review your marketing plan in order to reduce the cost. To go further, you could replace "Increase in turnover" with the net margin generated by your growth. Let's say that you generate an average net margin of 30%. If we take the previous example, this means that the growth in turnover following your campaign - i.e. €3,000 - allowed you to generate a net margin of €900. Do the math, and you get 80% ROI on your margin. Which means that for every euro spent on marketing, you generate a margin of €1.80. Your campaign is therefore largely profitable.