ROMI is a metric that allows you to evaluate the
Posted: Wed Jan 22, 2025 6:55 am
return on investment in individual marketing tools and channels, less often in the entire marketing campaign as a whole. In simple terms, ROMI allows you to determine the result of investments in product promotion: whether the income from the sale of a product is more or less than the amount spent on marketing. In this article, we will tell you how to calculate the ROMI indicator, and also figure out how to distinguish it from ROI.
ROMI Calculation Formula
An objective assessment of the effectiveness of investments is necessary for the correct distribution of the budget. It helps to determine which channels should be financed more and which should be cut. The accuracy of belarus whatsapp number database the results depends on the data available to the person making the calculations.
Universal formula
Some information is insider information, so it is not available to freelance marketers. In this case, the return on investment is calculated using a universal formula:
ROMI = (revenue - marketing expenses) / marketing expenses * 100%.
Income means the total amount of profit from sales without taking into account the costs of purchasing the product from the manufacturer or its production. In this way, you can get an approximate return on investment ratio. It will help determine the effectiveness of the analyzed promotion channel, but will have a high margin of error.
We explain what ROMI is in simple terms.
Let's look at an example. $500 was spent on targeted advertising in one of the social networks in a month, the profit from this channel was $4,000. Substituting all the values into the formula, we get 700% as a result, that is, each dollar invested brought $7 in profit.
Formula taking into account fixed costs
More accurate data can be obtained if, instead of income, we use gross profit in calculations, which is equal to the difference between revenue and the cost of production. In this case, we include fixed costs for the production of goods in the calculations.
ROMI = ((revenue - cost of production) - marketing expenses) / marketing expenses * 100%.
Let's say an online store sells postcards. They spend $2,000 per month to produce them. Then the profit margin is 300%, or $3 for every $ spent. We see that the marketing channel is effective, but the profit margin is more in line with reality than in the first case.
ROMI calculation formulas.
ROMI Calculation Formula
An objective assessment of the effectiveness of investments is necessary for the correct distribution of the budget. It helps to determine which channels should be financed more and which should be cut. The accuracy of belarus whatsapp number database the results depends on the data available to the person making the calculations.
Universal formula
Some information is insider information, so it is not available to freelance marketers. In this case, the return on investment is calculated using a universal formula:
ROMI = (revenue - marketing expenses) / marketing expenses * 100%.
Income means the total amount of profit from sales without taking into account the costs of purchasing the product from the manufacturer or its production. In this way, you can get an approximate return on investment ratio. It will help determine the effectiveness of the analyzed promotion channel, but will have a high margin of error.
We explain what ROMI is in simple terms.
Let's look at an example. $500 was spent on targeted advertising in one of the social networks in a month, the profit from this channel was $4,000. Substituting all the values into the formula, we get 700% as a result, that is, each dollar invested brought $7 in profit.
Formula taking into account fixed costs
More accurate data can be obtained if, instead of income, we use gross profit in calculations, which is equal to the difference between revenue and the cost of production. In this case, we include fixed costs for the production of goods in the calculations.
ROMI = ((revenue - cost of production) - marketing expenses) / marketing expenses * 100%.
Let's say an online store sells postcards. They spend $2,000 per month to produce them. Then the profit margin is 300%, or $3 for every $ spent. We see that the marketing channel is effective, but the profit margin is more in line with reality than in the first case.
ROMI calculation formulas.