Return On Investment (ROI)

Return on investment is a term that applies to almost every facet of business, including marketing. Knowing what return you can get on a marketing investment is important.

The definition of return on investment is the total net profit from a marketing campaign, divided by the total cost of the entire operation. ROI from an initial offer is often negative but to look at the long term picture it is important to know that customer lifetime value often brings the overall total into the positive.

In order to tell whether a marketing campaign is successful or not it must be known if there are returns or losses on the cost of the campaign. Setting controls and knowing past sales figures is essential to knowing if increases from a campaign occurred.