ROI (Return on Investment)
Definition
ROI measures the profit or value you receive relative to the amount you spend. In digital marketing, ROI is calculated by comparing the revenue generated from a campaign against its total cost, including ad spend, agency fees, and content production. A positive ROI means your marketing is making you more money than it costs.
Why It Matters
ROI is the ultimate measure of whether your marketing is working. Likes and followers are nice, but if your social media and advertising efforts are not generating revenue, they are not serving your business. Tracking ROI helps you make informed decisions about where to invest your budget and which channels or campaigns deserve more resources.
Example
A business spends $2,000 per month on social media management and paid ads. Over the month, the campaigns generate $12,000 in new revenue. The ROI is 500 percent, meaning every dollar spent returned five dollars in revenue.
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