Calculate the ROI linked to a campaign more precisely
Posted: Sat Jan 04, 2025 7:16 am
Now, let's imagine that your marketing costs amount to €1,000 in this same example. If we take the first calculation which is simply based on the growth in turnover, you get an ROI of 200%. This figure may seem impressive, but let's take a closer look at your margin. Remember that for a turnover of €3,000, you generate a net margin, a profit, of €900. If we calculate your ROI in relation to the margin, we get a result of... -10%! In this case, although your ROI is largely positive if we base it on your turnover, we see that for each euro spent on marketing, you "collect" -10 cents... so you lose money, despite the substantial increase in your turnover. Generally speaking, be very careful to include the cost of your marketing campaign in your profitability calculation, otherwise you risk having some cash flow problems (we will come back to this later in the article).
Calculate the ROI linked to a campaign more precisely
While the above formula is relatively simple to use, and can easily give you an idea of the effectiveness of a campaign, it assumes that all of your revenue growth is due to your marketing campaign. In reality, it is obviously more complicated. The growth you are experiencing can certainly be explained by the quality of your marketing campaign, but also by paraguay whatsapp list the natural growth of your market, and/or your business. For an ROI to be credible, it is vital to have these elements of comparison at your disposal, in particular your sales and growth over the months preceding the launch of your marketing campaign.
Ideally, take a closer look at your growth over the last twelve months. If you notice that the turnover generated by one of your products/services increases by 5%, without you having used any campaigns whatsoever, it is appropriate panama to remove this 5% in the calculation of the ROI of your marketing campaign. To do this, you need to significantly optimize the formula seen above:
[(Increase in turnover – Average organic increase in turnover – Marketing cost) / Marketing cost] x 100
Let's test this formula concretely, using the figures from the example used above. As a reminder: in our example, your average monthly turnover is €5,000. You launch your January marketing campaign with a budget of €500. At the end of the month, you have achieved a turnover of €8,000, an increase of €3,000 compared to your average monthly turnover. However, you have looked at the evolution of your monthly turnover from last year, and you see an average organic increase of 5% per month. This 5% of €8,000 therefore represents €400, and it corresponds to the organic increase in your turnover in January. Now, let's calculate the ROI of your campaign by taking this new data into account:
Calculate the ROI linked to a campaign more precisely
While the above formula is relatively simple to use, and can easily give you an idea of the effectiveness of a campaign, it assumes that all of your revenue growth is due to your marketing campaign. In reality, it is obviously more complicated. The growth you are experiencing can certainly be explained by the quality of your marketing campaign, but also by paraguay whatsapp list the natural growth of your market, and/or your business. For an ROI to be credible, it is vital to have these elements of comparison at your disposal, in particular your sales and growth over the months preceding the launch of your marketing campaign.
Ideally, take a closer look at your growth over the last twelve months. If you notice that the turnover generated by one of your products/services increases by 5%, without you having used any campaigns whatsoever, it is appropriate panama to remove this 5% in the calculation of the ROI of your marketing campaign. To do this, you need to significantly optimize the formula seen above:
[(Increase in turnover – Average organic increase in turnover – Marketing cost) / Marketing cost] x 100
Let's test this formula concretely, using the figures from the example used above. As a reminder: in our example, your average monthly turnover is €5,000. You launch your January marketing campaign with a budget of €500. At the end of the month, you have achieved a turnover of €8,000, an increase of €3,000 compared to your average monthly turnover. However, you have looked at the evolution of your monthly turnover from last year, and you see an average organic increase of 5% per month. This 5% of €8,000 therefore represents €400, and it corresponds to the organic increase in your turnover in January. Now, let's calculate the ROI of your campaign by taking this new data into account: