Return on Marketing Investment is the difference between the direct marketing spent or invested by a ﬁrm, and the proﬁt attributed to that marketing. ROMI is different from the other common ‘proﬁt-at-risk’ metrics used in business. In marketing ROI analysis, the term ‘risk’ is considered a very ambiguous term, since there is no guarantee that the amount of the expenditure will earn you any proﬁt. It is therefore, not a good idea to use ROI as a benchmark for determining the cost of marketing. There are many ways to analyse ROI and hence, there is a wide variety of companies that offer services for the purpose. However, before you start off any of the ROI services provided by an advertising agency or company, you need to be very clear about what you want to do with the return of your marketing dollars.
There are three basic business models available today: the cost per lead model, where the advertising agency or company sells one marketing opportunity to a client, which then sends a list of potential customers to the advertiser; a revenue sharing model, where in a percentage of the revenue earned from each client is returned to the client’s account; and the Cost per Action model, wherein a ﬁxed amount of advertising is provided and the client only pays for the leads that convert into sales. It is important to understand how the business models work before choosing the model for your next campaign. All of these models provide the advertiser with a chance to generate an unlimited amount of leads. However, each of them has its own pros and cons. The cost per lead model is best suited for businesses with small budgets, while the revenue sharing model is best suited for large businesses with an established brand. Lastly, the cost per action model is ideal for small businesses or start-ups.
Return on marketing ROI analysis is a way to quantify the success of a marketing campaign through statistical data gathered by a qualiﬁed and experienced team of professionals. The method works best for small businesses or start-ups. For most of these businesses, ROI analysis is an integral part of their decision-making process. It will give you a clear picture of how well your ad campaign is working and how much money you are spending on each customer. ROI. Most importantly, the analysis will help you determine how much additional funds you can spend in order to improve the quality of the clients you get and
thus, increase the number of leads you manage and generate more proﬁt.