Part 2: How to Calculate Your campaign Efficiency

How to Calculate your Traditional Marketing Campaign ROI

Two weeks ago, I noticed a significant issue in marketing, which was the challenge of accurately tracking expenses on marketing campaigns. As a result, I decided to address this problem, and in my previous article, I discussed how to calculate cost-per-click for online campaigns.

Today, I will be continuing with the series on How to Calculate your Campaign Efficiency. I will guide you on how to calculate ROI for a traditional marketing campaign.?

Grab your book and pen as we continue on Mrs. Sarah Jewelry’s store case study.

“The best way to improve your decision-making and decrease your business risk is to use data to guide your decisions.” ~ Pooja Agnihotri

After calculating her CPC and discovering the best campaign that suits her business online, she was still worried about her traditional marketing campaigns strategy such as print ads, billboards, and flyers she uses to promote her business. However, she's not sure how to measure the effectiveness of these campaigns and wants to ensure that she's getting a good return on her investment.

Measuring the ROI of traditional marketing campaigns can be difficult, but it's crucial to assess the success of your advertising efforts and make informed decisions. Failure to measure ROI means you cannot determine if your campaigns are generating sales or if you need to make changes to your strategy.

To calculate the ROI of a traditional marketing campaign, you need to first understand how to calculate the revenue generated by a traditional marketing campaign during the campaign period.

Let’s calculate the revenue generated.

To obtain an accurate or approximate figure, it's important to be cautious when dealing with complex data. Begin by examining your past sales records for the quarter and determine the average amount of sales made without any advertising campaigns.

Suppose you have sales data from the previous year for a quarter and you find that your average sales without any campaign were N500,000. If you run a print ad campaign in a local newspaper for three months and during that period, your business generates N18,000,000 in sales, you cannot simply attribute this entire amount to the sales generated by the campaign.

To determine the accurate revenue generated by the campaign, you need to subtract the average quarterly sales without a campaign from the total sales generated during the campaign period.

To calculate the total revenue, the formula is simple: Total campaign generated sales in the period - Average sales generated for the previous quarters without campaign = Campaign revenue.

It's important to note that revenue is different from ROI, which is calculated as a percentage of the profit generated compared to the cost of the campaign.

To calculate the ROI of a traditional marketing campaign, the formula is as follows: Total revenue generated from the campaign - Total cost of the campaign ÷ Total cost of the campaign = ROI.

let's do some calculation

For example, let's say Mrs. Sarah Jewelry’s store invested N1,000,000 in a billboard campaign that generated N7,000,000 in revenue. To calculate the ROI, he would subtract the total cost of the campaign (N1,000,000) from the total revenue generated (N7,000,000), which equals N6,000,000. He would then divide that amount by the total cost of the campaign (N1,000,000), resulting in an ROI of 600%.

Substituting the given values, we get:

ROI = (N7,000,000 - N1,000,000) ÷ N1,000,000 = N6,000,000 ÷ N1,000,000 = 6 (ROI). To convert this to a percentage, we can multiply by 100: ROI = 6 x 100 = 600%

Now, let's look at how calculating ROI can help small business owners like Mrs. Sarah.

By calculating the ROI of his traditional marketing campaigns, Mrs. Sarah can determine which tactics are generating the most revenue and adjust his marketing budget accordingly. For example, if his print ads generate a higher ROI than his billboards, he may decide to allocate more of his budget toward print ads.

Additionally, tracking ROI can help Mrs. Sarah identify areas where he needs to improve his campaigns. For instance, if a particular campaign has a low ROI, he can analyze the factors that may have contributed to its poor performance, such as the timing or messaging of the ad, and adjust it accordingly.

To get a better understanding of how calculating ROI can help businesses like Mrs. Sarah, let's look at a case study. The case study involves a small business owner who used traditional marketing tactics to promote her restaurant.

Case Study

In this case, the owner invested N30,000 in a print ad campaign, generating N120,000 in revenue. Using the formula, we can calculate the ROI: Total revenue generated from the campaign (N120,000) - Total cost of the campaign (N30,000) ÷ Total cost of the campaign (N30,000) = ROI (300%).

By calculating the ROI, the owner was able to determine that her print ad campaign was a success and generated a high ROI. She decided to invest more in print ads in the future and saw a significant increase in sales as a result.

In conclusion, calculating the ROI of traditional marketing campaigns is crucial for small business owners like Mrs. Sarah who want to ensure that their advertising efforts are generating a good return on investment. By tracking the revenue generated from each campaign and comparing it to the cost, business owners can adjust their tactics, allocate their marketing budget effectively, and make informed decisions about their advertising efforts.

If you learn something from this drop me a message on the comment. If you want us to discuss regarding your business send me a private message.

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See you next week and follow me Samson Agbaeze