Hi folks, I am new to this marketing stuff and I was wondering if someone can help me when it comes determining the ROI properly Basically, I have a set of figures for ad campaign which includes the cost of advertising and subsequent order details. I presume the ROI should be expressed as a percentage from which to report off. The calculation I did was Order Revenue - Shipping/taxes - cost of Radio Ad = profit / loss Then the ROI calculation I used is profit/loss divided by Order Revenue. So for instance: Cost of Ad1 $170 Orders/Net Revenue from Ad1 $350 Profit = 350-170=180 ROI = 180/350= 51% Cost of Ad2 $500 Orders/Net Revenue from Ad2 $210 loss = 210-500= -290 ROI = -290/ 210= -138% Cost of Ad3 $170 Orders/Net Revenue from Ad3 $0 ROI from Ad3 -100% any advice on this would be much appreciated Thanks for any advice you can give
You are doing it the wrong way. Let's take Example #1: You are spending $170 to make $350, essentially doubling your investment, so %50 can't be correct. You also for some reason divide profit by revenue, where's your investment amount in all of that? The correct calculation would be (350-170)/170 = 105%
I came across another way to calculate the ROI and now I am getting confused: ROI = Profit - Cost of investment / cost of investment 180 -170 / 170 = 5.8% Can someone tell me which method is right when it is used in marketing. All I am trying to do is to compare the cost of an ad campaign and the number of orders(revenue) derived from each market. Thanks for any help
Or you could do it like this. 180 * 100 / 170 = 105.8823529% Round it down to 2 decimal points would give you 105.88% ROI How I worked it out is 180 is your profit time's by 100 and then divide that total by your advertising cost. The way I done it is really the way you normally calculate interest percentage from your initial investment like when your doing stocks & shares or something, but it seems to also work with ROI. So Thezou was correct with his/her figure, just it seems to have been rounded down further than mine. 5.8% is no where near your return on investment. If it was then you would have only made a profit of around $9.86
All those numbers give me a headache. ~ Are you making more than you are shelling out, without hustling? There you go.