Return On Investment


Filed under category: Marketing



A B C D E F G H I J K L M N O P Q R S T U V W X Y

Return on investment (sometimes abbreviated ROI) is the profit made from any investment after the cost of the investment has been subtracted. The goal of every professional and successful company is to increase return on each investment. The formula for calculating return on investment is the gain from the investment minus the cost of the investment divided by the cost of the investment. See the image below for a better understanding of how to calculate return on investment, courtesy of investopedia.com.



return on investment | SEO & PPC campaigns

All search engine optimization campaigns and pay per click campaigns should yield a positive return on investment. Spending and revenue should be tracked for every campaign. Here is simple example for XYZ company. The XYZ company is contracting a professional ppc management company in order to manage their google adwords pay per click campaign at $400 per month. The company's ppc campaign ad spend is $600 per month making a total of $1000 per month as the investment cost. If XYZ company makes $2000 in profit from their ppc campaign investment, then the company has seen a 100% return on their investment.


Why It's Important

Calculating return on an investment is one of the most important things you will need to do if you want to run a successful company. If your return on investment is a negative number, then the investment was poor or not executed properly. Anytime you are running a pay per click campaign or an SEO campaign, you should always be calculating the numbers for your investment.