ROI Measurement

Translation? Return On Investment. A performance measure: Used to calculate the efficiency/effectiveness of an

investment. Measuring the amount of return compared to that that was spent in an investment process.

How is it calculated? The formula consists of the return of the investment

being divided by the cost of the investment, and the result is displayed as a percentage or ratio.

For example, suppose _____ invested £1,000 in ‘PizzaIsLife’ and sold her shares for a total of £1,200 a year later. To calculate the return on her investment, she would have to divide her profits (£1,200 - £1,000 =

£200) by the investment cost (£1,000), for a ROI: so £200/£1,000 = 0.2 or 20%.

Basic Math.Dividing what you’ve gained by what you’ve spent to

measure if you’ve been successful.

Is this relevant to us? To Advertising?

The Social Media Examiner

http://www.socialmediaexaminer.com/measure-social-media-roi/

Pros and ConsPros Cons

Can prove that the marketing efforts are working

Can see which parts of the campaign are working best and which aren’t

You can see if the campaign is improving by repeatedly finding out the ROI throughout it

Any changes that take place in the social media campaign means that the ROI needs to be constantly checked

It can be quite a tricky thing to do and takes time.

You have to track your campaign which can be hard if there’s lots of parts to it

Measures success but doesn’t take into account the period of time it may have taken compared to other investments.