What is the ROI of marketing? 

ROI measures the success of a marketing campaign. With your marketing strategy, you want to attract the attention of users, generate leads and increase sales. But how successful are the individual measures really? You can get this information from the return on investment. 

What is the ROI of marketing? The ROI shows whether your marketing measures have not only provided superficial success, but also ensure sales growth. Constantly monitoring the success of the measures implemented is an important point on the way to long-term sales growth.

ROI is also known as marketing return on investment and is used to quantify marketing. Tangible key figures can be used to determine whether your marketing programs or current campaigns are achieving the desired goals. These goals are primarily increasing sales. 

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In classic terms, the ROI shows you whether the marketing expenditure was worthwhile. To do this, a direct comparison is made between campaign expenditure and campaign revenue. We take a closer look at the background to ROI here. 

How the ROI for marketing is calculated

The return on investment is used to show in figures how successful a campaign has been. There are two ways to achieve this goal.

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Variant 1: The cost ratio

One of the variants is to determine the ROI via the cost ratio. You check what the so-called efficiency ratio is for your marketing measure. This tells you how much turnover you have generated per euro spent. The formula is as follows: 

Cost ratio = sales / investment

Ideally, the cost ratio should be at least 5:1. This means that for every euro you invest, you receive 5 euros in sales. This is an ROI of 400 %. It is even better if you achieve an ROI of 900 %, i.e. you generate a turnover of 10 euros for every euro. 

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Variant 2: Sales allocation

Measurement via indirect or direct revenue allocation has also proven itself. With direct allocation, revenue is allocated to the last contact point from a lead. With indirect allocation, revenue is attributed to all contact points. 

What is a contact point? If a marketing measure generates leads, the next step is to contact these leads. In other words, you call the people who left their details as part of the campaign. To calculate the ROI, it is now relevant whether the contact buys and when the contact buys, i.e. how many contact points still had to be invested to convince them of the product or service. 

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It is often easier to use the cost ratio as ROI, especially for a quick overview. However, if you want to gain a deeper insight into the successes or failures of the campaign, revenue allocation is the better choice. 

Information for the calculation - is it worth the effort?

In order to be able to calculate the ROI, well-founded information is of course required first. What you need: 

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• Campaign costs

• generated leads

• Closed leads 

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If it is a marketing campaign relating to a product that you are selling without leads, it will be a little more difficult to calculate the ROI. However, the recommendation here is: 

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Pay attention to the sales for the product before and the sales for the product after the campaign. This will also give you values that you can use as a guide. 

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In our experience, it is always important to keep an eye on the ROI. We see this as part of the overall marketing strategy. If you have key figures at hand, you can make much better adjustments to your marketing. 

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Influencing ROI - how does this work in marketing? 

Ideally, a marketing campaign should be designed from the outset in such a way that it results in an excellent return on investment. There are various points that you can use here. 

#1 A good target group definition 

The target group is particularly relevant for a good ROI in marketing. You should work as carefully as possible here. Define exactly what your target group looks like. Of course you want to reach a lot of people. However, experience has shown that the ROI is better if you focus on class rather than mass. Targeted communication in marketing is gold for the key figures. 

#2 Reduce cost-per-lead with inbound marketing

Many companies rely on comprehensive marketing measures to generate new customers. They collect lead after lead and then go through the new contacts - often with several contact points. This costs time and money. Far too little focus is placed on inbound marketing. Yet this is capable of significantly reducing the cost-per-lead and improving the ROI. 

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This means that you are targeting prospective customers who are already actively searching and therefore have a need to receive a solution in the form of your product. As a successful external marketing department, we at MORE know exactly how good inbound marketing works and are happy to do this for you. 

#3 Think long-term 

In marketing, things often have to happen quickly. A campaign should be set up, implemented and successful within a short period of time. However, you can achieve a good ROI in marketing by thinking long-term. Many purchasing decisions are not simply made immediately. They need time. People are repeatedly addressed by your campaigns. Needs develop and the desire to buy arises. But this is exactly where patience is required. Plan your marketing campaigns for the long term, keep calculating the ROI and keep an eye on it. 

#4 Plan campaigns with permanently usable content 

High-quality content for a marketing campaign costs time and money. It is all the better, also for the ROI, if you can use this content permanently or use it elsewhere. Imagine creating a series of guides for your campaign. This not only draws interest to your product. With high-quality content, you can also increase the visibility of your website in the search engine. You will be able to generate new traffic and also create discussion posts for social media. This means that the investment in the marketing campaign pays off in the long term. 

Why is ROI so valuable in marketing?

With the return on investment, you can see how profitable your marketing really is. You have real figures at hand and can compare them. Of course, you will also notice whether a campaign is successful. But the ROI means you have it on paper. At the same time, it is possible to optimize the campaign while it is running. 

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It is also useful to compare the ROI with the values from past campaigns. Imagine you are launching a new product on the market. After a week, you carry out the calculation. The ROI is 100 %. You take a look at the figures from the last launch of a new product. At the same time, the ROI was 150 %. 

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Without the key figures, you might not even have noticed this clear difference. But now it can be checked: 

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• How is this campaign different from the last one? 

• Where do interested parties leave the advertising again? 

• Is there any criticism of the campaign on social networks? 

• Are open questions addressed sufficiently? 

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At the same time, the key figures provide you with information about: 

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• the expertise of your marketing department

• the effectiveness of the individual channels used

• the best advertising measures within the campaign 

• the development of profitability 

Additional KPIs besides ROI for marketing 

Marketing ROI is therefore an important key figure that should always be checked for every marketing activity. Key figures are often mentioned in the context of company growth. But what if we only focus on marketing here? 

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Marketing agencies may try to tell you that sales in themselves are a sign of a campaign's success. But that's wrong. We'll tell you how it really is: key figures and evaluations help you to conduct marketing at a very high level. 

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We have compiled other important key figures for you: 

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• Sales growth: Sales growth is the simplest key figure, as it can be compiled quickly. But here, too, it is important to compare the values of the campaigns with each other. 

• Landing page conversion: The landing page conversion rate clearly shows how actively visitors to your website are encouraged to make a purchase via the campaign. 

• Leads: The leads themselves also represent a key figure. How many leads can actually be achieved with the campaign? Was the objective achieved or even exceeded? 

• Key figures from social media: Many marketing campaigns rely on social media, among other things. Various key figures can be checked here, such as conversion, likes, increase in followers or click rates. 

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Not all KPIs are suitable for every marketing campaign. Experts from the marketing industry can accurately assess which KPIs are relevant. As an external marketing department, we at MORE actively work with KPIs. 

Conclusion: ROI in marketing provides information about success

How good is the current marketing campaign? Which campaigns were better in the past? Will it pay off if you continue to pursue the marketing measures? These questions are answered by the return on investment. This special key figure makes it clear how high the turnover per euro invested is. It provides information on whether everything is working smoothly and whether you will achieve or have achieved your goal. 

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MORE acts as an external marketing department according to your wishes. We use the extensive knowledge of our experts for the campaign and keep you up to date on the success of the marketing measures via the ROI for marketing. 

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