In the business world, we are always paying attention to the return on the investment(ROI). Without a doubt, this KPI is considered as one of the most important since it reflects the overall business performance. Quite often while conducting ROI analysis, companies undervalue calculating the return on the marketing investment(separately). Today, we will discuss why it is so important to measure the marketing ROI and how it can be improved.

What is Marketing ROI and why do marketers need to optimize it?

Marketing return on investment (ROI) is a performance measure which shows the degree to which the marketing efforts contribute to the overall revenue growth.

How marketing ROI can be used by marketers and why ROI analysis is important:

Knowing marketing ROI can help marketers to identify the right direction – defining which marketing campaigns are successful and which ones are not. As a result, ROI analysis can help marketers to enhance their marketing efforts and improve ROI.

Understanding the marketing ROI will help marketers to:

1. Plan the Budget for the Future Marketing Campaigns

marketing roi analysis

This is one of the most important tasks for a chief marketing officer (CMO) of any company- making sure that the resources were allocated efficiently. That is why it is important to conduct a marketing ROI analysis to have a clear vision regarding the marketing campaign’s efficiency. To ensure budget and resources are allocated for future campaigns, it is crucial to calculate the marketing ROI for the previous year and justify the current marketing expenses at the executive level.

2. Provide Effective Budget Allocation

plan your marketing budget

Understanding which marketing campaigns bring more revenue will help you to allocate the marketing budget properly. With this in mind, marketers can identify the right mix of offline and online campaign efforts better and, as a result, further improve the marketing ROI. This will also help to avoid ineffective marketing spending that could also affect the overall revenue growth.

3. Know the Competition within the industry

competitor analysis

Monitoring the marketing ROI of competitors allows marketers to accurately understand how their organization is performing within their specific industry. If the financial data is publicly available, marketers can estimate the marketing ROI of their competitors and adjust their strategy. Such ROI analysis can be very useful to companies, especially if they are struggling with defining their competitive advantage.

As we can see, it is crucial for marketers to calculate and optimise their marketing ROI performance.

Imagine that you already have your marketing ROI calculated. What would be the next steps? Right, it would be time to improve it!

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In our next article, we will show you how to improve your marketing ROI in 4 easy steps!

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Find out more about Marketing KPIs tracking with Anomaly Detection and the benefits of predictive analytics in marketing!