Understanding how to calculate ROI for various marketing activity can prove the effectiveness of your campaigns and improve buy-in from company leaders

Previously, return on investment (ROI) has focused on paid media marketing in order to show the connection between building brand awareness and the direct response on sales. Today, however, marketers need to showcase how owned and earned media spend is directly accountable for measurable impact on sales.

This need for greater accountability has come about as we are seeing greater investment in various types of marketing – including content marketing, email, social media and video – that support and impact all stages of the customer buying cycle.

To put it simply, the ownership of the “funnel” is now shifting toward marketing, meaning marketing needs to prove return on investment for all of its activities.

What are the benefits of calculating marketing ROI?

• Justifies market spend by showing profits associated with marketing activity.
• Provides insight on what activity you should be spending on.
• Allows you to benchmark your performance against that of your competitors.
• Measures the efficiency of your marketing campaigns.

There are a number of other benefits in calculating marketing ROI too, from providing a case for new forms of marketing to showing that your department is profitable enough to take on new team members.

What are the common challenges when calculating marketing ROI?

• Variables on both the profit and the cost sides can make the calculations complex.
• Not tracking data correctly can result in incorrect calculations.
• Miscommunication between departments, especially marketing and sales.
• A lack of Key Performance Indicators (KPIs) for both sales and marketing.
• Not knowing where to start with your data or calculations.

While these challenges can seem difficult to overcome, putting the right processes and communication channels in place can help streamline your ROI calculations.