As the business landscape becomes more global and thus more competitive, virtually all companies are investing in marketing campaigns to bolster revenue and brand or service recognition. However, with the recessionary environment that currently exists, businesses are being forced to become much more aware of cost-cutting and saving opportunities to survive. Consequently, many managers are demanding more accurate information on what type of return on marketing investing, or ROMI, they are getting for their campaigns.Typically, ROMI is calculated using two metrics, short term and long term, with a formula.
Calculating short-term ROMI is relatively easy using an index. Essentially, each dollar of revenue generated through the campaign being analyzed is compared with each dollar spent on marketing during the campaign. In other words, you are able to identify how much revenue was generated per dollar spent on marketing.
Compile a detailed record of your revenue from the campaign in which you are looking at. Make sure you isolate the revenue for this campaign only and do not use revenue figures for the year, unless you are calculating long-term ROMI and these campaigns fall within your time frame.
When calculating long-term ROMI, use the same steps as above, but choose a time frame that you wish to measure. Then, simply include all revenue and marketing spent dollars from all of the campaigns in that time frame.
Become intensely familiar with your marketing campaign budget and expenses. This includes all activities related to the campaign, such as advertising costs, market research, focus groups, administrative costs and any materials or transportation required. All in all, this is a complete overhead of your marketing campaign. If you are looking to complete a more long-term ROMI, it is necessary to have all the marketing expenses for the campaigns you have completed in your time frame.
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