What is return on investment (ROI)?
In the context of marketing, return on investment (ROI) measures the efficiency and profitability of capital invested into a particular marketing campaign.
ROI is one of the most important metrics for any business to consider in choosing how to allocate their marketing budget. As you might assume, high ROI indicates an advertising or marketing campaign is resonating with customers and generating enough profit to justify its cost, whereas low ROI indicates that the campaign either needs to be further optimized or paused altogether.
There are a number of factors that affect the ROI of a marketing campaign, including:
- target audience
- effectiveness of the marketing copy and call-to-action (CTA)
- marketing channel used to drive traffic
For example, a campaign targeting younger consumers may have a higher ROI if it’s delivered on social media, whereas a campaign targeting older consumers may be more effective if it is delivered via email or SMS.
There are many other factors that determine the effectiveness of a campaign, so in order to achieve the highest ROI possible, it’s key to consider each of these factors, test different approaches, and optimize performance based on objective results. This may involve A/B testing different copy variations, testing different marketing channels, or targeting different sub-segments of the audience.
Ultimately, if marketers can’t achieve high ROI, you may need to look at the product/market fit and see if that needs to be addressed.
How to achieve maximum ROI?
Singular helps you get the most out of your marketing
How do you calculate ROI?
ROI is calculated by dividing the net profit that directly resulted from the campaign by the total cost of the campaign, which is then expressed as a percentage:
ROI = Net Profit / Total Cost of Campaign * 100
Why ROI is so important for marketers?
As mentioned, ROI is a critical metric for marketers to track as it’s directly related to the profitability of a marketing campaign. By tracking and optimizing the ROI of their marketing campaigns over time, marketers can ensure that they’re not wasting valuable resources on ineffective marketing strategies that don’t actually result in profit.
In addition, ROI is an essential metric to consider as it allows you to compare the effectiveness of different marketing strategies and campaigns from a profitability perspective. By knowing which marketing strategies and campaigns are the most effective and generate the highest ROI, businesses can allocate their budget in a way that maximizes their profits and minimizes their costs. For example, a business may be able to determine that a particular social media channel is generating a higher ROI than another, and thus the marketer can prove to other stakeholders that allocating more budget towards that channel is a smart business decision.
Although ROI is such a key metric, it’s also quite difficult for marketers for marketers to track without the right tools, as HubSpot highlights:
When it comes to marketing, determining ROI can seem tricky. While more traditional PPC and social media ads can provide more specific rates of return, it can still be challenging to link hard revenue numbers to marketing content like videos and blogs.
How Singular helps you track ROI
As a leader in marketing analytics and mobile attribution, Singular provides marketers with the ability to connect and aggregate all their data from each marketing channel into a single, holistic view. By aggregating data from all media sources,Singular provides businesses with a comprehensive view of costs, conversions, revenue, retention, ROI, and other relevant metrics in a single platform.
In addition to tracking ROI at the campaign level, Singular enables marketers to visualize the performance of individual ad creative assets side-by-side. This enables marketers to make more informed decisions about which efforts are working and allocate marketing budgets more efficiently.
In summary, Singular provides mobile marketers with unparalleled ROI insights, allowing them to get a comprehensive view of their data at the most granular level. By combining ad attribution, other revenue sources, and cost aggregation, Singular helps businesses to determine the true ROI of each marketing campaign, channel, and more.