Digital Marketing Dictionary

Return on Investment (ROI)

By June 20, 2020 No Comments

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Return on Investment (ROI) is a measurement on the performance of paid marketing or other campaigns to determine whether the “investment” was profitable or not.

ROI attempts to measure the exact return, in profit, from a given campaign. Calculating ROI is as simple as dividing the return of an investment by the cost of the investment. The result will be a percentage or a ration.

ROI = (Current Value of Investment – Cost of Investment) / Cost of Investment)

Why is Return on Investment Important?

The most important variable for every business is: return on investment.

When it comes to determining the success of your business, especially any marketing or ad campaign, ROI is a calculation that summarizes those results.

ROI gives a clear, measurable number to determine the success and outcome of your efforts. If you are buying ad space and keywords that result in high traffic and high conversions, the result from your advertising would yield a high return. Knowing this, you can make the decision to adjust your marketing spend to generate the best possible ROI.

Alternatively, ROI can be used to evaluate other metrics of a business, not just its profitability. When it comes to social marketing, ROI might refer to the amount of social engagement that a campaign received. It all depends on how you or your marketing team defines success.

Not sure what this means for your business? Get in touch to learn how to take your customers on a conversion focused journey — send a message.


Author Kevin Urrutia

Kevin is the founder of Voy Media. Kevin is an avid outdoorsman and nature lover; when not in the concrete jungle of New York, he can be found trying to explore a real one. Follow Kevin on Twitter Voy Media has been named the #1 Facebook Marketing Agency and one of the fastest growing marketing agencies in NYC. Voy Media crafts custom digital marketing strategies for clients, including services in Facebook Ads, Google Ads, Amazon Ads, email marketing and more.

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