ROMI

Let's examine the ROMI metric — what it is, how to measure and analyze it, and how to build an effective marketing strategy.

ROMI: What This Metric Means and Why You Need to Calculate It

Marketing ROI is estimated as a percentage and calculated using a unique formula. This needs to be done to:

• evaluate the effectiveness of advertising campaigns and other brand or product promotion activities;
• analyze the effectiveness of different types of advertising: teaser, contextual, targeted, banner, and native;
• understand whether it is necessary to change the advertising budget or optimize previously launched advertising campaigns;
• choose the primary method of promotion and focus on it when developing a further marketing strategy;
• assess the profitability of email campaigns, push messages, SMS, messengers, widgets, App Inbox, and In-App. 

 How to Calculate Project Profitability: The ROMI Formula

It is easy to calculate the profitability of the marketing project. To do this, use the following ROMI formula:

It should be borne in mind that marketing costs include not only the advertising budget for
placement but also the cost of paying employees of the marketing department.

Calculate the profitability of your project in a few clicks using Yespo's ROMI calculator.

How to Evaluate the Overall Investment Performance: The ROI Formula

There is also such a metric as ROI, which marketers often consider in conjunction with ROMI. Unlike Return on Marketing Investment, which indicates the profitability of advertising, Return on Investment reflects the return on all investments made in the project.

It is calculated using a similar formula, but instead of marketing costs, you need to substitute the amount of all investments in business development.

You can also quickly calculate the overall investment efficiency with the ROI calculator from Yespo.

How to Analyze ROMI and ROI Indicators

It is necessary to evaluate not only the obtained ROMI and ROI indicators but also the peculiarities of the business niche.

If you get less than 0% when calculating these metrics, this indicates your marketing is ineffective and needs to be revised urgently. A score of 0% means that you have reached the break-even point of marketing, but it still does not bring profit to the project. This requires strategy optimization.

Anything above 0% indicates a return on advertising investment: you are moving in the right direction. The higher the figure relative to 0%, the more effective your actions are. For example, ROMI and ROI of 100% indicate that your investment has paid off twice.

Please note that these metrics should be evaluated both in the short and long term. There are niches where it is simply pointless to make such calculations immediately after the end of an advertising campaign, as the results will be unsatisfactory. These include all areas with a long transaction cycle, where the cost of goods or services is quite high: real estate sales, cars, securities, jewelry, plastic surgery, etc.

A buyer could see your advertisement today and conclude a deal with the company only a few months later. He was thinking, analyzing the market, and comparing offers all this time. Now, his money has been credited to your account, but during the short-term ROI and ROMI assessment, it was not taken into account in the profit.

Therefore, these calculations should be made a little later for niches that require more touches and a lot of time to make a decision.

In addition, when assessing ROMI in the long term, consider that investments in advertising have brought not only profit but also increased target audience loyalty, brand trust and market recognition, and reduced time to purchase.

All of this will result in an increase in the company's revenues and LTV (customer lifetime value), which indicates how much profit the company has received from the customer over the entire period of cooperation.

How to Increase the ROMI Score

To increase the ROMI score, you need to:

• increase website conversions with a well-thought-out SEO strategy;
• revise your pricing policy, run promotions, offer discounts and bonuses;
• launch advertising campaigns in social media, on your website and partners' resources, and in newsletters;
• improve the products and services quality;
• analyze the sales cycle and optimize advertising campaigns based on the results;
• increase the advertising offer relevance (this will improve the ads` click-through rate);
• review the keywords and phrases used in contextual advertising and expand the semantics;
• finalize the sales funnel and change the workflows depending on the reasons for the failure of previous deals;
• plan and allocate your advertising budget wisely.

With ROMI, you can evaluate the effectiveness of your marketing campaigns to spend money only on promising channels. This will definitely affect business profits.