ROI: what does It mean?

The ROI (Return On Investment/Return on Investment) is a metric that measures the performance of an investment in digital marketing. It is calculated by dividing the net profit obtained by the investment. The result is expressed as a percentage or ratio.

The ROI is a very useful tool to evaluate the effectiveness and cost-effectiveness of the actions of digital marketing that is carried out. It allows to know if a campaign has generated more income than expenses, and to what extent. Thus, you can optimize the budget and allocate resources to the most successful strategies.

How to calculate the ROI?

To calculate the ROI of a digital marketing campaign, you must take into account the following steps:

1. Define the objectives and the metrics that will be used to measure. For example, the number of visits, leads, conversions, sales, etc
2. Estimating the economic value of each objective. For example, the average selling price, margin of profit, the value of the life cycle of the customer, etc
3. Determine the total investment made in the campaign. This includes the direct and indirect costs, such as design, advertising, tools, personnel, etc
4. Calculate the net profit obtained by the campaign. This is done by subtracting the total investment of the revenues generated by the targets achieved.
5. Divide the net income by the total investment, and multiply by 100 to get the percentage ROI.

The ROI is a metric must have for any professional in digital marketing that want to measure and improve their results. The ROI helps you make data-driven decisions and maximize the return on investment in digital marketing.

An example of ROI calculation would be the following:

• He launches a campaign of email marketing to promote a product that has an average selling price of 50 euros and a profit margin of 20%.
• The campaign has a total cost of 500 euros, including the design, the platform, the database, and the sending of the emails.
• The campaign generates 1000 visits to the website, 200 leads and 50 sales.
• The net profit obtained by the campaign is: (50 x 50 x 0.2) – 500 = 500 – 500 = 0 eur.
• The ROI of the campaign is: (0 / 500) x 100 = 0%.

In this case, the ROI is null, which means that the campaign has not generated any profit or loss. To improve your ROI, you may take such measures as better segment the audience objective, to improve the design and content of the mails, to offer incentives or discounts, do a follow-up and constant optimization, etc

How do you improve it?

Some strategies you might consider to improve the ROI in your next marketing campaign:

1. Define your goals: Before you begin any campaign, you need to have a clear idea of your goals. Do you want to increase sales, improve brand awareness, generate leads? Set specific, measurable targets will allow you to monitor and adjust your strategy as needed to achieve those goals.
2. Know your audience: To get a better ROI, you need to understand your audience. Performed market research to identify your audience and their needs. Know what matters to them and how they behave will help you create content that resonates with them and will increase the likelihood of that action.
3. Uses different channels: Do not limit yourself to a single channel to promote your campaign. Take advantage of the social networks, e-mail, online advertising, marketing, influencers, and any other channel that is relevant to your target audience. Diversify your marketing channels enables you to reach a wider audience and increase the likelihood of conversion.
4. Create compelling content: The content of your campaign should be creative, useful, and relevant to your audience. Use images and videos eye-catching to grab the attention of consumers. In addition, make sure that the message of your campaign is clear and easy to understand.
5. Measures and fits: Monitor the results of your marketing campaign so you know what works and what doesn't. Use analytical tools to measure performance and adjust your strategy accordingly. If something is not working, don't be afraid to make changes to improve your ROI.

In conclusion, improving the ROI on a campaign marketing it takes careful planning, a clear understanding of your audience, the use of multiple marketing channels, and the creation of engaging content. With these strategies, you'll be able to maximize your results and get the highest return possible on your investment.