Return On Investment: Why is it Important?

ROI is a term that we use a lot in the marketing industry. ROI stands for Return on Investment, and it means the same. It involves calculating how much your investment is worth versus how much it costs. It is a vital data point for marketing campaigns.

The formula for calculating return on investment is fairly simple. All you have to do is divide the net profit of the investment by the investment cost and multiply that by 100. So if you invested $1000 in one month on your social media campaign and had a net profit of $5,000 then your ROI would be ($5,000/$1,000) x 100 = 500%. Not too bad!

So why is this number so important? Your return on investment for your marketing efforts is vital to measuring the success of those efforts and justifying the money spent on them. If you are forking over tons of money for a video ad every month, you want to know it’s working!

Not only can your ROI determine the success of your current marketing, but it can also help you plan for the future. If you have tried both social media ads and Google ads in the past, but got a higher ROI from the social media ads, it would make sense to spend your marketing budget on the campaign that performed better.

Now that we know what return on investment means, how do we track it? This is a little more complicated but it all boils down to data. A good place to start collecting data is Google Analytics. Google Analytics can help you track website traffic, conversions, where the website traffic came from, and even which type of content brought you the most traffic.

When it comes to paid ads, the platforms that you use typically have built-in measurement tools for you to track performance. You can then use the analytics data from those tools to measure the success of your campaigns.

Once you have an idea of how to track and calculate your return on investment, it is time to maximize! Here are some tips for maximizing your ROI:

  1. Set crystal clear goals – know what you are trying to achieve and how to measure it before jumping in. There is no way to achieve success if you don’t know what success means!
  2. Learn from the past – if there are some strategies that you have tried in the past and some performed better than others, it is a better use of your budget to go with what works.
  3. Consider your content – if you tried different creative strategies or content within your previous campaigns, consider which content got the best results. Suppose your boosted post of a cute puppy performed better than a boosted post with a sales graphic. In that case, puppies are a good strategy!
  1. Experimentation is helpful – try different offers (free shipping, limited-time discounts, etc.), try different platforms, and try different content. You never know what might resonate with your target audience. It is essential to keep your target audience in mind when trying different strategies. If your audience reacts well to your video content on Facebook and Instagram, then consider posting video content on YouTube or TikTok.

The team at Muldrow Marketing is experienced in developing the perfect strategies and designs for bringing you the highest return on investment. We’re ready to elevate your growth by elevating your ROI.


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