The acronym ROI, is used in reference to the expression “Return On Investment.”
ROI is one of the most important KPIs in marketing as it relates the economic results of a marketing campaign and the budget invested to conduct it.
The general formula for calculating ROI is Operating Income/Net Operating Invested Capital.
However, there is another formula for calculating this value, which considers it as the product between return on sales (ROS) and the turnover rate of invested capital (turnover).
As we can easily guess, evaluating the ROI for a marketing campaign is of considerable importance as it allows us to:
- best optimise your budget by choosing the most profitable activities and channels;
- make more informed strategic decisions;
- understand the behaviour of their target audience according to the proposed activities.
Although ROI represents a very important KPI to evaluate, it is not always easy and simple to assess. Generally speaking, unlike traditional media, digital media allow for a more precise valuation precisely because of more advanced tracking tools and analytics that can be updated in real time.
It is worth remembering that although ROI provides a clear and evident snapshot of a campaign’s performance, it is reductive to take this value as the sole reference for judging its effectiveness: it is always important to take into account several KPIs in order to have a complete and exhaustive overall picture.
