Return on Investment

Key Marketing ROI Benefits

Marketers can use their baseline MROI calculations to:

Using ROI to make data-driven decisions, marketers can more effectively distribute resources and optimize their strategies to drive long-term success.

Risks of Ignoring ROI Analysis

Not having a model to calculate ROI and measure success can result in wasted time and money spent on unprofitable marketing strategies.

Ignoring ROI affects all business units that could benefit from investing time, resources, and finances into profitable ventures. Without taking certain factors like the ROI of a specific marketing campaign or channel, or of an employee’s time and resources into account, businesses can end up with:

ROI Formula for Marketers

Calculating ROI requires businesses to divide the net amount they earned in profit from a financial or strategic investment by the total investment amount. Next, they’d multiply that number by 100.

Let’s say a business launches a holiday marketing strategy and invests its $200,000 budget on everything from graphic and web design to copywriters, media planning and buying with an ad agency, printing and shipping of direct mail pieces, and email deployment.

The company then earns $900,000 in sales from the holiday campaign.

The strategic ROI calculation would be:

The ROI is, therefore, 350%. That number indicates that the campaign delivered a significant ROI and can now be used as a benchmark for future holiday marketing strategies.

ROI Variables and Limitations to Consider

Time is one of the most significant limitations to measuring marketing return on investment, or MROI. While a B2B lead generation campaign may only last a month or two, the average sales cycle lasts about six months.

Many campaign strategies, such as content creation, branding, customer advocacy, and social media, can continue to drive leads and sales for many months – and even years – after a completed campaign.

When that extra time is not factored into the calculation, it may significantly impact the perception and reality of a marketing strategy or campaign’s success.

We recommend that businesses take a more long-term approach to calculating ROI, focusing on the complete length of a marketing campaign rather than looking at outcomes too early.

Additionally, remember that metrics such as cost-per-click and click-through rates only show one small piece of the puzzle. Not everyone who fills out a lead gen form on a website or a landing page will do so via an online ad, for example.

For more information about overcoming the challenges associated with calculating the marketing return on investment (ROI).

Digital Tools to Help Measure and Calculate ROI

There are some digital tools businesses can use to gather all of the data necessary to measure and calculate their overall ROI of a marketing strategy.

B2B marketers can use reporting and analytics tools, along with conversion tracking data, to analyze performance over time and measure online ad success post-campaign.

1. Frequent Testing and Experimentation

Marketers can test and experiment with different sales channels to find those that drive the highest ROI for their business. LinkedIn’s campaign reporting and conversion tracking tools mentioned above can help with the experimentation process.

Additionally, marketers can use A/B testing to increase the ROI of their campaigns by optimizing copy and creative on landing pages, and in their emails and ad units.

2. Focus on Web Analytics and Core Metrics

Using a web analytics tool with a campaign management tool, marketers can choose key objectives (e.g., generating leads and conversions) for each channel and track core metrics, like conversion rates and cost-per-conversion, to optimize campaign results and ROI over time.

3. Track Spending Over Time

Keeping a close eye on marketing and ad expenditures over time will also help businesses identify where and when they might be able to adjust budgets to boost overall ROI.

LinkedIn Ads reporting and conversion tracking reports can help to identify budget areas that could either be optimized or adjusted for future success.

4. Conduct Customer Research

Gaining a deeper understanding of customer personas through customer research, and conducting a SWOT analysis of competitive marketing strategies will enable businesses to better plan and adjust their own strategies and budgets to boost ROI in the future.