What is ROMI (Return on Marketing Investment)?
ROMI is an abbreviation for the term "Return on Marketing Investment" and expresses how much (in monetary terms) you get out of your investment in marketing. ROMI can be considered a narrower version of "ROI", which is most often used interchangeably with ROMI within the marketing industry.
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Read more about the related terms: ROI (Return on Investment) and ROAS (Return on Ad Spend) here.
In other words, ROMI is your revenue from marketing compared against your marketing expenditure. A ROMI of 100% means that you have a profit of 100% on your marketing investment.
ROMI is often used as a high-level KPI for the marketing department to describe how strong a return is being achieved on marketing, but it is also used as low-level KPIs for individual channels, departments, and even down to individual campaigns and ads.
How is ROMI calculated?
ROMI is calculated by comparing marketing costs against marketing revenue — either at an overall level or for selected marketing campaigns or similar.
Formula for calculating ROMI
ROMI = Profit - Investment / Investment x 100
An example of a ROMI calculation: you have invested 1,000 in a marketing campaign on social media. The campaign has generated a profit of 10,000:
ROMI = (10,000-1,000) / 1,000 x 100 = 900% / 9 times
This means your ROMI is 900% or 9 times, meaning you get your investment back 9 times over.
When is a ROMI considered good?
Broadly speaking, as soon as ROMI is positive, you have a positive return on your investment.
If ROMI is negative, you are losing money on the investment and it is not beneficial.
How good a ROMI actually is depends largely on your margins, and risk, time horizon, and other factors should be part of your considerations regarding the specific marketing investment.
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