ROI in Marketing

ROI (Return on Investment) is a marketing metric used to evaluate the efficiency and profitability of an investment. It measures the return generated on an investment relative to its cost and is typically expressed as a percentage. 

What is marketing ROI and why is it important? 

Marketing ROI evaluates the return generated from marketing efforts relative to the cost required to make it happen. Marketing ROI is crucial to understanding the value a campaign, strategy, or influencer partnership brings to a brand.

A positive marketing ROI indicates that a campaign generated more revenue than it cost, while a negative ROI suggests that the campaign did not cover its expenses. Brands use marketing ROI to assess the efficiency of their marketing investments and to guide future marketing strategies.

How do you calculate marketing ROI?

There are two ways you can calculate ROI - by calculating it manually using an ROI formula or by using Later Influence’s ROI reporting feature. 

Marketing ROI formula

Brands can calculate marketing ROI manually by identifying the total revenue generated from a specific marketing campaign and subtracting that from the total cost of the campaign, including all expenses related to advertising, content creation, and any other associated costs. This is the net profit, which can be divided by the campaign cost to calculate the ROI ratio. Finally, the ROI ratio is multiplied by 100 to be expressed as a percentage.

For example, if a campaign generated $10,000 in revenue and cost $4,000, the net profit would be $6,000. Dividing $6,000 by $4,000 gives an ROI ratio of 1.5. When multiplied by 100, results in a marketing ROI of 150%. This calculation provides a measure of the campaign's effectiveness in generating returns on the marketing investment.

Later Influence™ ROI reporting

With Later Influence, return on investment (ROI) is calculated by adding the total Earned Media Value (EMV) for a campaign plus any conversions attributed to trackable links, subtracting your total paid costs to creators, and then dividing that figure by the total paid cost of your campaign to receive your ROI multiplier.

The formula is as follows:

(EMV of the campaign + Sales Conversion Amount* - Paid Cost) ÷ Paid Cost

You can access your EMV + ROI across the Later Influence platform through the Reports section, Campaign Performance Report, and Shareable Performance Reports. Book a demo today! 

How do you improve marketing ROI?

The best way improve your ROI is by adopting a multifaceted approach that encompasses various strategies, including influencer marketing. Start by clearly defining your target audience and aligning your marketing efforts with their preferences and behaviors. 

Utilize data through Later Influence’s analytics features to track and measure the performance of your campaigns, enabling you to make data-driven decisions and optimize your strategies. Later Influence easily connects you to influencers who resonate with your target audience, to boost your brand credibility and reach.

Focus on creating high-quality, engaging content that captures the attention of your audience and encourages interaction. Continuously test and refine your tactics based on performance metrics to ensure maximum efficiency in achieving a higher marketing ROI.

How do you boost ROI with influencer marketing?

Use Later Influence to identify influencers whose audience demographics align with your target market. Develop a clear, collaboration strategy that leverages the influencer's unique style and reach. Create authentic, engaging content that resonates with the influencer's audience while subtly promoting your brand. Utilize tracking links and promo codes to measure the direct impact of the campaign on sales and engagement. Engage with the influencer's followers by responding to comments and feedback, fostering a sense of community and loyalty. Analyze performance data to refine your strategy, focusing on the most effective tactics and influencers. By leveraging the credibility and reach of influencers, you can enhance brand awareness, drive conversions, and ultimately boost your marketing ROI all in one platform.