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The only time you should have a marketing budget is when you are in the testing phase of your marketing

Best Ways To Measure Marketing ROI

By setting a Marketing Budget you are implying that either your marketing isn’t working and hence it’s a pure expense. Or you have no idea if it’s working because you don’t measure the Marketing ROI.

If I am selling $100 bills for $80, how many would you buy? Would you still set a budget for it ? I hope you already got the answer why you should not have a Marketing Budget, if you can spend $80 and Earn $100 then you don’t need to limit how many you buy.

The real question is, how do you know what you are earning on every Dollar spent? This is where Measuring ROI on your Marketing efforts comes into play. If you are a smart entrepreneur you will always Measure ROI on your Marketing Efforts.

The only time you should have a marketing budget is when you are in the testing phase of your marketing, the objective of testing phase is to discard what’s not working and keep and optimize what’s working until you have the best possible ROI.

What Is Marketing ROI?

ROI simply means return on investment. In marketing it means how much are you earning on your marketing expenditure.

What Is Negative And Positive ROI?

Suppose you are spending $1000 on an advertisement, and you touched 500 people in the process. Out of these 500 people, 100 showed interest in your offer, of which 10 actually went ahead and bought your product or service.

If you are earning a profit of $80 on every sale, you have earned $800 on every $1000 spent, which means you are earning less than what you are spending, or in other words, you have a negative ROI.

Suppose on every sale you are earning a profit of $12, then your total profit would be $1200 which is $200 more than what you spent to earn this profit, hence you now have a Positive ROI.

This is exactly why you need to measure your marketing efforts.

Let’s see how you can measure ROI.

In Marketing, ROI Is Not Always Monetary

If your target for a campaign is to build an email list then profit on sales does not come in question. So have a clear vision of what you want to achieve out of a marketing campaign.

Other Factors That Influence ROI

Calculating ROI is not simple or easy, there are too many variables involved. It’s not simple money spent vs money earned. If your campaign is doing great and is generating the desired interest in the target market but your website is crappy, or your sales team is not trained, you will still lose a lot of money, and the marketing campaign might take the blame for this failure.

Therefore it is very important to measure different aspects of a marketing effort.

For example you can measure how many people are reached with your campaign, how many people showed interest in your offering, how many actually contacted you, how many bought etc. That way you will have a clearer picture of where the process is lacking and you can fix it. If for example your campaign is generating a lot of leads but the bounce rate off your website is pretty high, then you know it’s your website which is the culprit and not the marketing campaign.

Steps To Measure Marketing ROI

Steps To Measure Marketing ROI

  1. Calculate Your Expenses
  2. Keeping Track Of Time
  3. Analytics
  4. Lifetime Value Of A Customer

Calculating Your Marketing Expenditures

The first thing you need to track even before you start a marketing campaign is how much you are spending on it. A lot of entrepreneurs new to marketing usually miss to take into account certain not-so-obvious expenses that if not calculated can make a failing campaign look like a winner.

For example, suppose you have meticulously planned a facebook ad campaign, you have calculated your daily facebook expenditure to run this ad but you did not take in account the money spent on the copywriter and the graphic designer who worked to design this campaign. Now when you start to Measure Marketing ROI, you won’t get correct figures.

Therefore, you need to start with making a list of all the expenses, no matter how trivial they are.


Always calculate your expenses for every marketing channel and every campaign separately, if you are running a Facebook ad campaign, a Google ad campaign, an Instagram ad campaign, then calculate their expense separately, that way you will have a clearer picture which channel and which campaign is giving you best Return On Investment.

Keeping Track of Time

When calculating how much sales you had with your marketing campaign, it becomes paramount to take a time period into consideration. It could be a week or a month or even more. The best practice is to calculate expenditure to revenue over both short term and long term periods.

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The problem with time is most new entrepreneurs do not know when to stop, they keep running a loser campaign a bit too long in the hope of hitting the jackpot somewhere down the line. Which is a wrong strategy therefore it is very important to calculate both short term and long term so that you can have a clearer picture and you can make the decision at the right time.

You Need Analytics

If you don’t know what’s broken, how are you supposed to fix it? Without analytics you can not measure the effectiveness of your marketing campaign, and hence your Marketing ROI

The role of analytics is simply to measure your marketing efforts.

If you understand the analytic tools of digital marketing, then it’s really not that hard to get the insight into how your ad campaign is performing. Be it a a Social media ad campaign, search engine ad campaign or email blast, there are easy to use tools to track the performance of these campaigns.

On the other hand it’s a little hard to analyze campaign performance of an offline advertisement. If you can get people from your offline ad to you website, you can track how the ad is performing. To do that, have a separate branded short-url and custom landing page for every such campaign, that way when you get visitors through these urls, you know which ad got you the most views.

Customer Lifetime Value(CLV)

Another factor to keep in mind while calculating ROI is a Customer’s Lifetime Value. Customer Lifetime Value is the total worth to a business of a customer over the whole period of their relationship.

It’s not easy to calculate CLV, especially if you are new to keep track of your customers. If you don’t have data to reference to, then your best bet is to start now, that way once you have the past data you can actually judge your campaigns better.

Things You Need To Do

  1. Identify customer touch points where the value is created
  2. Keep customer journey records
  3. Measure revenues at each touch point
  4. Add up the revenues over the lifetime of that customer


If you know what you are measuring and you have the tools to measure, you will always get the best bang for your money.

Before you even think about launching a marketing campaign, make sure you already have a plan how you are going to measure the success or failure of the campaign.

Keep discarding the campaigns that are losing money and keep optimizing campaigns which are showing result. And soon you will have a winner campaign.

Most of the time the difference between the loosing campaign and a winner is as simple as a broken headline. So make sure you have your sales copy perfected and you have a killer offer for your target market.

Happy Marketing.

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