Guides | 09 min read
Measuring Marketing ROI – How to Calculate for Success
Within the world of marketing, measuring ROI not only validates your most recent efforts but also informs future work and shape strategies. And return on investment, or ROI, means exactly that – what kind of return is your business experiencing as a result of the investment you’ve put in?
Indeed, any marketing professional understands the importance of evaluating the performance of a brand’s advertising efforts. Without these measurements, a business cannot have a grasp on impact, meaning there’s no way of understanding whether your campaigns are profitable or helpful.
Proving profitability can be crucial, especially for brands and businesses that are required to justify their marketing spend and the investments made. We understand that a marketing budget isn’t always simple to secure – so understanding more about ROI and attaining measurement methods might just be the key to success.
In this guide, we’re going to be digging a little deeper into this topic. We’ll be covering what marketing ROI is, what a positive one looks like, how to calculate and measure it, plus ways in which you can help elevate your ROI.
Topics we will cover in this guide to marketing ROI:
- What is ROI in marketing?
- What is a good ROI in marketing?
- How to calculate marketing ROI
- Measuring creative marketing ROI
- What can help?
1. What is ROI in marketing?
ROI is used to measure the success of an investment or several investments. When we talk of ROI in the context of digital marketing it’s exactly that – measuring the return on the investment you’ve made from your marketing spend.
Being able to justify marketing budget is often an essential part of working in this field in many different sectors. That’s often where ROI comes into play. The impact of your marketing campaigns is measured by profit, or revenue gained as a result.
Depending on how your team operates, you may wish to measure marketing ROI per individual campaign or view your efforts as one. Marketing ROI can be vital not only for measuring success in this way but can also inform the effectiveness of future initiatives. Not only is it a key component for ensuring the success of marketing efforts but measuring ROI can both justify and secure the budget for your next campaign.
2. What is a good ROI in marketing?
An average marketing ROI is widely accepted as a ratio of 5:1 and strong is thought to be anything above that, while 10:1 is considered to be extraordinary. A ratio below 2:1 is regarded as unprofitable and will likely see organisations break even, rather than experience revenue uplift.
Anything over a 10:1 ratio isn’t impossible to attain but it’s advisable not to include this as an attainable goal as it’s uncommon.
However, what is considered a good marketing ROI can vary, depending on which industry your business or brand operates within. On a more granular level, this will also depend on the goals and expectations of your individual business. No two brands are the same or have the same aims.
So what is profitable and what do you need to take into account? Remember, this will vary depending on the sector but you will need to account for overheads. Once these have been accounted for, along with specific factors of your industry, you’ll have a better view of what makes a positive marketing ROI for your company.
It could also be crucial for your measurements and for setting a ratio to attain to consider that determining a benchmark for your efforts can be tough as marketing tactics vary.
For instance, measuring the ROI of a content marketing strategy focused on functional content along with analysing and measuring a display advertising strategy with the same method might be difficult.
All of these factors mean the ratio you target will be dependent on your structure, tactics, spend and industry.
3. How to calculate marketing ROI
There are several ways to calculate your marketing ROI – how you choose to do this depends on your business. The most common way to calculate marketing ROI is with a formula – this is a typical ROI measurement.
By harnessing tech, you can use a marketing ROI calculator, or simply use a chosen formula. The most popular of these formulas does the following:
- Subtracts your investment total from your revenue total
- Divides this number by the investment total
- Multiplies this number by 100 to discover your ROI percentage
However, while this is widely used by many, it may be too simplistic for some – especially considering the previously mentioned marketing tactics can vary so greatly.
This is why calculating or measuring your marketing ROI can extend beyond typical measurement models and formulas. This will be a completely different process to There are more steps marketers can take to gain a clearer, more accurate picture of the ROI of your efforts.
These steps might include:
- Setting clear and comprehensive goals
- Defining budget and marketing costs
- Establish a measurement model that fits
This process might also include keeping track of factors such as:
- How much it cost to produce your campaign from start to finish – including promotional expenses
- How long marketing efforts took from conception to deployment
- Analytics – has there been an uplift in traffic?
- Brand awareness measurements such as social media engagement
All of these measurements can be considered as Key Performance Indicators, or KPIs, and are a great way of measuring your creative marketing initiatives.
4. Measuring creative marketing ROI
As we’ve established, measuring marketing ROI can go further than formulas, especially for more creative campaigns. When we talk of setting clear and comprehensive goals, KPIs can certainly come into play.
Essentially, KPIs are measurable goals that are put in place to help quantify the success of marketing efforts – especially helpful with tracking creative marketing victories.
ROI measurement in a digital marketing landscape can be beneficial for managing both internal and client expectations. When set successfully, KPIs can help a marketer to prove the work they’re doing is having positive outcomes.
During the pandemic, KPIs have significantly grown in importance. Many brands have benefitted from the repurposing of creative materials in the digital marketing landscape and have seen their ROI improve as a result. Having a solid grasp on setting KPIs can therefore be incredibly beneficial for your business.
It might be important at this point to note what you shouldn’t include as a KPI. In short, if you can’t change it, or have any positive impact on it, don’t set it as a goal. Also, avoid striving for any metrics that won’t benefit your business or the businesses you work with financially. For example, there’s little point in ranking for irrelevant keywords on a search engine. Yes, you’ll rank for something, but will it convert into a sale for the brand? If the answer is no, don’t include hitting this metric within your KPIs.
There are many measurable KPIs you can add to your ROI, for example:
- Site visits
- Organic search
- Social media reach
By creating a marketing ROI template that suits your structure, your business and your industry, you can set a path to success for calculating your success and securing your future budget.
5. What can help?
As well as understanding ROI as a whole, along with the best ways for calculating and measuring your marketing success, thinking of ways to boost your ROI can prove invaluable.
So, what can offer a better return for your brand and a more visible view of success? There are exciting possibilities available to any brand in this instance.
These range from utilising tech and tools, to gaining greater control and a better view of your marketing efforts by bringing efforts in-house.
Get ahead of the competition by taking a holistic view of your overall marketing structure and your output and you’ll discover margins to heighten and create efficiencies.
There’s little doubt that harnessing the power of technology – if implemented correctly – can be transformative for your marketing and advertising efforts.
The pandemic has changed the way businesses view tech and accelerated the adoption of its effective use. In fact, digital transformation is far more than just a hot topic – COVID-19 has been proven to advance tech adoption by years, in some cases. This kind of digital uptake is rarely successful without strategies and frameworks in place, however.
What about in-house marketing?
Something many businesses the world over have found incredibly successful for their ROI has been the act of bringing their marketing in-house. This is certainly something that is having a positive impact when it comes to return on investment.
Our 2021 State of In-housing Report shows that there’s a positive correlation between in-housing and ROI. A staggering 63% of senior marketers added personnel to their in-house teams over the past 12 months. Not only this, but two-thirds of brands reported a positive change in ROI since bringing their marketing in-house.
In-house marketing isn’t a one size fits all, however. It can be as flexible as your approach. Our brands are using everything from full in-house agencies to traditional models, plus a fresh hybrid approach.
Can tools increase marketing ROI?
With an in-house model comes the possibility of putting increased power and responsibilities with your talented marketers. This is where using tools and technology can have immense benefits for ROI.
For example, the Creative Management Platform (CMP) from Bannerflow is a single cloud-based platform. This can help in-house teams design, schedule, publish, and optimise digital ads at scale.
This platform allows you to have a view of everything as it happens. This means your team can have access to live data and even update a campaign in real-time. Without a doubt, a tool such as this can increase your brand’s ROI through testing, refining and increasing performance. With ongoing access to optimise your campaigns, you are also optimising your ROI.
Measuring ROI within the world of marketing can sometimes be difficult. However, it’s made possible by using a combination of formulas, setting KPIs and harnessing the power of tech tools. Selecting the elements that suit your tactics can help you:
- Measure the success of your campaigns
- Test, refine and increase performance
- Justify your spend
- Secure budget for future efforts
- Identify a baseline measurement for future success
We hope this guide has given you a clearer understanding of both why measuring your marketing ROI is so important and also how you can measure more effectively.
While formulas may be standard practice, they’re not always the best way to identify creative success, so KPI setting might better suit your brand.
Don’t forget there are also ways you can enhance your ROI. Bringing your marketing efforts in-house has been proven to improve ROI – even during a pandemic – and utilising powerful tech tools can vastly improve your output.
If you want to offer your marketing team the tech they need to boost ROI, why not book a demo of our premium CMP? Not only will your brand create powerful, memorable and personalised ad campaigns at scale, but you’ll also feel the benefits of live optimisation. Outpace the competition and enhance your ROI in real-time with Bannerflow.
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