ROI Advertising Defintion

ROI in advertising is one of the key areas in business that needs to be regularly checked and monitored.

ROI is Return-On-Investment. This acronym can be used in many different ways.

When operating a business, it is important to know what the ROI is for advertising.

Marketing and having a plan, is the most important requirement to operate a business. If you don’t have customers, you are not getting an income to run the organisation.

There are many challenges with calculating ROI for advertising.

  1. Calculating the ROI manually using a vouchers, receipts and spreadsheets has a human error factor, it will never be 100% accurate
  2. You need to train your staff to follow procedures when tracking manually
  3. To do electronically, you will need to get a specialised IT person to write it into your system if it’s allowable or possible, and this can take a long time and lots of money
  4. It’s not always practical in busy situations, information not provided to staff, or lack of staff training or buy in

It is important to measure the success or failure of your marketing campaigns, but this is only known when you can get the data through the ROI on advertising.

The ROI formula is to calculate if you are getting more money back than you are putting in.

  • Total revenue is the amount of income that has come from the advertising
  • Total cost is the amount of money spent on the advertising
  • ROI is the amount that is left after the calculations

When you know what the ROI is for all your advertising campaigns, then it is good to be able to make comparisons to make decisions on the best investments, and the information can also be used for negotiations with suppliers to get better deals or more flexibility or whatever you want from the partnership.

A good marketing ROI for advertising is 5:1. This ration is considered strong for most businesses, and a 10:1 ratio is excellent.

Getting a higher ratio is possible, but is not realistic in most campaigns, and is dependent on the costs of the campaigns.

Costs that need to be included in your ROI are any fees or money required to run the campaign. These can be agreed amounts by the host advertising, production costs in competitions like printing, design work and data entry, consultant fees, or anything that is needed to run the advertising.

Now I’m sure that you’re now going to do a search to look for programs that can do ROI calculations, and there is a lot of sites that will discuss or explain how to do it, and other platforms that can measure online activity.

Google and Facebook analytics are amazing apps that have so many details of ROI activity, and you can go down so many tracks within these programs for details and information, that it can sometimes be too much for the average business operator, and what are you going to do with this information.

The most important information that I wanted as a restaurant owner was how many sales was I getting from each campaign, what was my advertising ROI and Maralytics is the online program that can do this.

Categories: Hospitality.