ROI in an online marketing campaign- advice needed

Discussion in 'Search Engine Optimization' started by Sarahstudent, Feb 12, 2011.

  1. #1
    Dear forum users,

    I am management and marketing student trying to solve coursework task. I have to calculate the ROI factor for an imaginary online marketing campaign. The data I was given is as follows:

    IMPRESSIONS--> 400000
    CLICKS --> 4000
    CTR --> 0.01
    CPC --> 1.5
    CPM --> 15
    CPA --> 13.33
    COST --> 6000
    CONVERSIONS --> 450
    ACTIVITY(% of active users among converted users)-->13%
    AVERAGE REVENUE PER ONE USER: 55

    I started off by calculating the number of actual purchases, so:

    13% * CONVERSIONS= 58.5

    and multiplied it by average revenue per user:

    58.5 * 55 = 3217.5

    The formula I used for ROI is:

    ROI = Net Profit/ Cost = Profit-Cost/ Cost

    to get:

    ROI= (3217.5-6000/ 6000 ) *100= -46.4%

    Is my reasoning correct ? I find it surprising that the ROI value turned out to be negative, especially as the following part of the task kind of suggests that it should be rather high...

    I will be obliged for any tips concerning my problem...

    Sarah
     
    Sarahstudent, Feb 12, 2011 IP