Return on investment; a measure comparing the financial benefit of an activity with the cost required to produce it.
A broad measure of whether a marketing investment created enough value to justify its cost.
Short and sweet:
Return on investment; a measure comparing the financial benefit of an activity with the cost required to produce it.
A broad measure of whether a marketing investment created enough value to justify its cost.
See also: Return on Investment, ROAS, Customer Acquisition Cost
ROI, or return on investment, compares the profit generated by a marketing effort against what it cost to run, usually expressed as a ratio or percentage so results from campaigns of very different sizes can still be compared fairly. A small campaign with a modest budget can post a higher ROI than a much larger one, even if the larger campaign generated more total revenue, since the calculation is about efficiency rather than scale. Because it distills performance into one number, ROI is often the figure marketing has to defend most directly to finance and leadership.
A company that spends $10,000 on a Facebook ad campaign and generates $50,000 in sales is looking at a strong ROI, since the return far outweighs the original spend.
Marketing teams at companies like Procter & Gamble are under constant pressure to prove this kind of payoff on every campaign, justifying budgets by tying spend directly to measurable sales lift.
A homeowner comparing solar panel quotes might calculate the return on that investment by figuring out how many years of energy savings it takes to recoup the upfront installation cost.
