How to calculate roi marketing and why you need to

Calculating your ROI marketing provides valuable insight that can help your business. This is an important percentage that is affected by every marketing channel, including your app.

What is ROI marketing?

There are many different metrics that digital marketers should keep an eye on, like the conversion rate, customer lifetime value, cost per lead, and so much more. Return on investment (ROI) is one of them.

ROI is a percentage that reveals how much was gained after making an investment. Digital marketing ROI focuses on returns from marketing investments.

Your ROI analysis should be both long-term and short-term, the former comparing year to year ROI, and the latter looking at month to month ROI.

How to calculate ROI

Here is the basic ROI formula:

(Revenue-Investment)/Investment = ROI

Before you can perform this calculation you must answer two questions:

  • What gains should be counted as returns from marketing?
  • And what expenses should be counted as investments in marketing?

This is where the ROI formula starts to get a bit more complicated. When contemplating what should be considered a return, there are different options that include:

  • Gross profit;
  • Net income,
  • Customer lifetime value.

Next, let’s consider what expenses to include in the ROI formula. Advertising expense is an obvious one, but you might also want to consider other, less obvious costs that are required to generate a return.

These could include the cost of designing your ads, monthly fees for your email service provider, website fees… Think of every step of your marketing plan.

If you have multiple channels, find out how much each one is contributing to your overall ROI by tracking each channel’s individual ROI. This includes your app.

Why is ROI marketing important?

Here are some reasons why you should pay attention to ROI.

  • It shows you which marketing channels and strategies, provide the greatest returns so that you know where to put more money and effort;
  • Return on investment can also show you where improvements to your marketing plan are needed so that you don’t waste money and time on ineffective strategies,
  • Although it might be tempting to reduce marketing expenses, calculating digital marketing ROI allows you to see the results of your investments, reminding you and your team that this expense is not only worth it but also necessary for business success and growth.

3 Tips to Improve ROI

If you need some help with increasing your marketing ROI. Here are some tips to get you started:

  • Test your strategies – A/B testing reveals which strategies in your digital marketing plan work and which need tweaking. Only test one element at a time. You might want to start out with the headline, then move on to testing different images, and continuing until all elements have been tested;
  • Pay attention to trends – Data is only useful if it guides you in taking the right steps and actions. As you carry out your marketing plan you will begin to notice trends over time. These trends will show you where the greatest marketing opportunities are, which is where you should be putting most of your efforts,
  • Get more app users – As you probably already know, your app can be a great marketing channel that also gives users the chance to purchase your products or services. That’s why increasing user acquisition can increase ROI. ASO is a great strategy for getting more users.

So if you are ready to improve your marketing ROI, you need to get serious about ASO. Reach out to a specialist to get help. Your app will become more visible and acquire more users, bringing you the results you want!