How to Measure ROI in Marketing

If you’re considering working with a marketing agency, one of the first questions you may have is around Return on Investment (ROI). Often this term is misunderstood or misaligned, so it’s important to think about how to measure ROI in marketing over and above financial terms.?

What is ROI??

Firstly,?ROI?is a performance measure that’s used to calculate the efficiency and/or profitability of an investment. It’s a simple calculation where you take the total?revenue?earned and subtract the cost of investment.??

Most people think of ROI as monetary value, of course, this could be the ultimate goal, but it can take other forms. For example,?brand awareness,?which helps position your business at the forefront of your customer’s minds, which can lead to increased sales further down the line. ?

Why measure ROI??

By monitoring your investment, whether in-house or outsourced, you can begin to build a better understanding of which channels are most effective for your product or service. You may find that traditional marketing efforts, like leafletting or printed ads, provide a better return than organic social media, for example. Alternatively, you may find that PPC (Pay Per Click) campaigns are the best way for your business to generate sales.??

How to measure ROI?

Let’s break it down with an example:??

You hire a?marketing agency?which requires an investment of ￡35,000 a year from your business. It’s also worth noting that your standard investment with an agency might exclude things like search engine optimisation (SEO) and paid advertising.

By the end of a full year working with your marketing agency (which required an investment of ￡35k), your business has made ￡100,000 in sales. The basic ROI calculation would be:??

Total Income – Marketing Agency Investment = Return on Investment (in this example the ROI would be ￡65,000).??

How do you know if you’re generating good revenue if you’re measuring based on brand awareness?

You can?measure brand awareness?in the following ways:?

• Social listening – tracking the conversation and mentions that are related to a chosen topic on social media platforms?
• Google trends and Google analytics – searching your branded search terms on Google to see how they compare to your competitors?
• Brand tracking software?– this is designed to scan relevant brand touch points and combine all sources of information into simple-to-understand metrics – while also providing actionable ideas as to how to push things in the right direction?

Need more information?

We've got you covered! If you're a service-based business or need clarity on measuring a specific marketing activity, take a look at the full blog over on our website where you will find more information on how you can measure your ROI in marketing.

Ready to outsource??

If you made it to the end of the blog, thanks for reading! You might also be thinking that you don’t have the skills or time in-house to get the most out of your marketing and/or social media activities.??

If you’d like to chat through the outsourcing options,?we’d love to hear from you. And if you’re not 100% sure whether you’re ready to outsource we have?written another great blog?that could answer any questions you might have!??

Until next time,?stay social!