How to calculate ROI and what it is for

How to calculate ROI and what it is for

Whatever your goals are in the course of an AdWords advertising campaign, do not forget to evaluate how beneficial this advertising is to you.
After all, no one wants to merge a huge amount of advertising, and in the end does not even go to zero.
To evaluate the effectiveness of your advertising, you need to calculate the ROI.

 

Quite often you can find such an option as ROMI. The difference between the indicators ROMI and ROI is in the field of their application. The term ROI is used in various spheres of life where investments are present, and the term ROMI is used only in marketing.

So, since we are evaluating the work of contextual advertising in this case, ROMI will be more correct.

This metric will help you understand your earnings from an advertising campaign, distribute budgets between campaigns in your account, and increase their effectiveness.

 

In order to calculate this coefficient, you need to know two indicators:

  • profit from your advertising
  • advertising campaign costs

 

The formula for calculating ROMI is:

ROMI = (profit – advertising costs) / advertising costs * 100%.

If the obtained coefficient ROMI> 0, then you can be calm and satisfied – your advertising campaign is profitable.

At first glance, everything seems to be simple, but when this coefficient starts to be realized in real life, confusion with the same costs can arise.

Some people can count only the amount spent on the advertising campaign, some, in addition, take into account the work of a specialist, a designer (if he was attracted to create banners), and other such waste.

A common opinion, what needs to be taken into account, and what does not – does not exist.
If in your calculations received a negative ROMI, do not rush to completely abandon advertising.

Firstly, remember that different factors can trigger – seasonality of your product, subject matter – in some cases, the user needs a long time to complete the order (as an example, promotion services) and in the end the most common error.

Secondly, conduct an analysis of your campaign, identify weaknesses, come up with methods for eliminating them, make appropriate adjustments, and it is possible that your campaign will begin to make a profit.

Anna Ralova
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