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English Marketing ROI calculation
Marketing ROI shows what your media actually returns. The formula is simple. The pitfall lies in the numbers you put into it.
Marketing ROI is the ratio between the incremental profit that marketing generates and the costs incurred, expressed as a return on the marketing investment.
How to calculate marketing ROI
The basic formula is: ROI = (incremental revenue minus costs) divided by costs. An ROI of 200 percent means that every euro invested returned three euros in revenue, of which two euros were profit above the costs.
The word that determines everything is incremental. If you use claimed revenue from platform reports, you include conversions that would have happened anyway. Your ROI then looks better than it is.
For an accurate calculation you should also work with margin, not with revenue. A high revenue ROI on a low-margin product can still result in a loss.
Where marketing ROI often goes wrong
Four mistakes that systematically make the calculation look too favourable.
Claimed instead of incremental revenue
Platform figures include brand traffic and retargeting in full. Calculate with incremental contribution.
Too short a measurement window
TV and brand campaigns continue to work for weeks. A window of a few days misses that effect.
Ignoring offline channels
Measuring only digitally attributes the revenue driven by TV to search channels.
Revenue instead of margin
Calculate with gross margin and EBITDA contribution, otherwise you measure growth without profit.
An ROI figure the board trusts
A reliable marketing ROI comes from a model that analyses all channels together, isolates the incremental contribution and tests the outcome against actual results. That way you can defend the figure with evidence rather than assumptions.
Datafy calculates ROI per channel based on incrementality and translates this into EBITDA contribution. You see not only the return, but also where additional budget still generates a return and where saturation begins.
Frequently asked questions
What is a good marketing ROI?
That depends on your margin and growth objective. More important than an absolute figure is whether the ROI has been calculated on an incremental basis and whether there is still margin headroom to scale profitably.
What is the difference between ROI and ROAS?
ROAS is revenue divided by advertising costs and says nothing about margin or incrementality. ROI calculates with profit and costs. ROAS can be high while ROI is negative.
How do I include offline media in my ROI?
Through Marketing Mix Modeling. That model includes TV, radio and other offline channels in the same analysis as your digital channels, so the ROI per channel is comparable.
Why is my actual ROI lower than the platform figures?
Because platforms show claimed conversions, including revenue that would have arisen without advertising. On an incremental basis, ROI is almost always lower but more realistic.
Calculate ROI on an incremental basis.
Book a demo and see how Datafy calculates marketing ROI per channel and translates it into EBITDA.