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Based on these numbers, here is what you could expect for return on investment*
Based on these numbers, here is what you could expect for return on investment*
Questions We Get Asked A Lot
Why is ROI important in Digital Marketing?
Return on Investment (ROI) in digital marketing is essential for evaluating the effectiveness of your online marketing efforts. Suppose you’re running a lead generation campaign to promote your service-based business. The ROI helps you determine whether the money you’ve invested in digital marketing is generating more profit than what you spent.
What is the difference between ROAS and ROI?
Let’s say you invested $3000 in running lead generation ads for your services. After a month, these ads brought in $15,000 in sales directly linked to the campaign. Initially, you might calculate the Return on Ad Spend (ROAS) based solely on the ad spend and sales revenue. In this case, the ROAS would be $15,000 divided by $3,000, which equals 5, or as we say in digital marketing, ROAS is 5x.
However, to get an accurate calculation of ROI in digital marketing, you must also consider additional costs, such as management fees. These fees cover the time and effort spent managing and optimising the ad campaign. Let’s continue with the same management fee example of $1,500 per month.
Now, to calculate the ROI accurately, you include both the ad spend and the management fee in the total cost. So, your total investment becomes $4,500 ($3,000 ad spend + $1,500 management fee). With this total investment, you then calculate the ROI using the sales revenue generated.
How do you calculate ROI?
To calculate the ROI figure, we need to determine the net profit generated from the investment and then divide it by the total investment cost.
Net profit = Sales revenue – Total investment cost = $15,000 – $4,500 = $10,500
Now, we’ll use the net profit to calculate the ROI:
ROI = (Net profit / Total investment cost) * 100% = ($10,500 / $4,500) * 100% = 233%
So, the ROI for this digital marketing campaign is 233%.
Which is better, ROAS or ROI?
ROI is a much better figure to use than ROAS. ROI ensures that you’re not just measuring the returns from ad spend (ROAS), but also factoring in all associated costs to determine the true return on your investment. It provides a clearer understanding of the profitability of your digital marketing campaign and helps guide strategic decision-making regarding marketing budget allocation for your business.
Can I use this ROI Calculator for SEO?
Yes, you can use our ROI calculator to measure returns on SEO, social media, email marketing, and pretty much anything really! You simply need to input the total revenue and total cost over a given time frame and our ROI calculator will do the rest.
How does 80/20 Digital use the ROI calculator?
Our account managers use this calculator regularly with our clients to help them understand ROI. Clients track their sales through a CRM or a spreadsheet to keep track of sales. We then work out the total return Vs investment made over a given period of time.
Digital Marketing Case Studies
For over a decade, we have worked with small to medium businesses throughout Australia, and indeed, further afield in the US, Canada, the UK and Ireland. Our lead generation experts have helped our clients generate millions of dollars in revenue and achieve their business goals. We specialise in helping service-based businesses typically based in professional services, health and the B2B commercial and industrial space. Check out some of the work we have done by scrolling through the digital marketing case studies on the right.
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