ROI in marketing: be aware of the return on investment of your campaigns!

In the marketing world, ROI (return on investment) is a key factor in measuring the success of campaigns. This performance indicator shows how effective a campaign is, and helps to determine the extent to which marketing activities have contributed to the company's financial goals. ROI is designed to examine the relationship between revenue and costs, allowing marketers to optimise the use of their resources. Measuring return on investment is essential for conscious planning and refining marketing strategy. Let's dig deeper and find out what the concept means, how to calculate it and why it is a huge risk if ignored.

The application of ROI in marketing

In the world of marketing, using ROI is like a compass in a maze. In data-driven decision-making, ROI helps companies optimise their marketing strategies and allows them to see clearly which campaigns are delivering real return. The benefits of ROI include the ability to identify areas where companies should invest more resources. This makes it easier to justify budgets because the numbers don't lie.

When justifying budgets, ROI shows which advertising activities are increasing revenues. A data-backed comparison will show which campaigns are most successful and where changes need to be made. In addition, ROI gives an accurate picture of how advertising costs are distributed and which channels are proving most effective.

It is one of the most important metrics for measuring the success of campaigns, especially as it not only builds on past results but also provides guidance for planning future campaigns. ROI is therefore not only a measure of current performance but also a basis for future success.

What do the numbers say? - How do we calculate ROI?

ROI, or return on investment, is a fundamental indicator in marketing and a key element of business decision-making. The basic formula is simple:

(Sales increase - Marketing cost) / Marketing cost

Through this formula, the return on the marketing effort invested is clearly shown. However, the real power of the formula lies in the factors we include in the calculations.

If we look only at simple revenue growth, we get a distorted picture. It is also important to separate organic growth, as not all revenue can be directly attributed to marketing activity. The correct calculation is therefore:

(Sales growth - Organic growth - Marketing cost) / Marketing cost

This gives a more accurate picture of the impact of marketing.

The customer lifetime value (CLV) is another important aspect that should not be ignored. CLV is a measure of how valuable a customer is to the business in the long term. When calculating ROI, it is important to include CLV because it provides a picture of the long-term contribution of customers, which becomes particularly important when assessing the ROI of individual customer relationships.

ROI is therefore not just a numbers game but requires a deeper understanding of financial processes and customer relationships. By using more precise formulas and highlighting the role of CLV, we can gain truly valuable insights into marketing effectiveness.

The relationship between ROI, PPC and SEO

In the online world, every click and search comes at a cost, but how do you effectively turn that marketing spend into a return on investment? ROI, or return on investment, is a key measure of the success of PPC (pay-per-click) and SEO (search engine optimisation) campaigns.

Analysing PPC campaigns: how do we measure ROI?

The PPC campaign is the scene of rapid results. A well-designed PPC campaign will deliver immediate results, but the real question is: are these results paying off? ROI here helps us to see the relationship between advertising costs and revenue from reach. To be effective, we need to accurately assess which ads are driving conversions versus those that are generating less return. This will optimise budget allocation and allow us to reap the true rewards of our investment.

SEO effectiveness: the correlation between organic traffic and ROI

SEO takes a different approach to ROI. While PPC delivers immediate visible results, SEO provides a long-term or sustainable presence. Here, it is the measurement of organic traffic growth that becomes relevant. When calculating ROI, it is important to understand that organic search results are included in the equation at a one-off cost of entry, which represents a huge return on investment. However, the real challenge is to ensure that the benefits from SEO are sustainable over the long term. ROI helps us to not only measure organic search traffic but also to recognise its financial value so that we can build a stable, return on investment foundation for the business through search engine optimisation. 

A well-designed, ROI-driven PPC and SEO strategy works in harmony like a two-wheeled engine: PPC delivers fast results, while SEO delivers sustainable growth.

Why is it dangerous not to measure ROI?

Tracking ROI is essential to ensure the effectiveness of marketing strategies. Without regular evaluation, it is easy to get lost in a world of costs and revenues. But why is this risk so serious?

Imagine that a company puts a lot of effort into implementing marketing campaigns without properly measuring their effectiveness. In such a case, growth analysis becomes essentially a blind flight. Without knowing which elements are working well and which are not, it is difficult to identify successful strategies or those that need urgent improvement. As a result, a company can waste resources on campaigns that don't deliver measurable results, hindering long-term growth opportunities.

In addition, the complexity of the modern marketing world, especially for omnichannel campaigns, can further complicate the process. Customers can now engage with a brand at multiple touch points - whether online or offline. If we don't look at ROI, we can miss important insights about which channels are working best and where changes need to be made.

Neglecting ROI can result not only in lost opportunities but also in concrete losses. Conscious and regular measurement helps companies optimise their strategies, maintain their competitiveness and get the most out of their marketing efforts.

ROI, or return on investment, has become an indispensable tool in marketing, helping to allocate budgets efficiently and fine-tune strategies. It is also the basis for future marketing trends. In an increasingly competitive market, only those who accurately measure and analyse the impact of their campaigns will survive.

At Meraki, we know how important this is, so we continuously measure and optimise to ensure that marketing activities always deliver maximum results. We believe that a good ROI in the present sets the foundation for the future - but to achieve this, there is no getting around the need for continuity in measurement and optimisation.