ROI (Return on Investment) – return on investment. ROMI and ROI analysis allows you to determine how accurately your marketing efforts are measured and evaluated.
ROMI and ROI
Example . A clothing company decides to promote a new collection. Over the course of a month, 100,000 rubles were spent on promotion and 50,000 rubles on the release of a new product line. During this period, an increase in sales of 400,000 rubles was recorded, associated with the successful advertising of this collection on the market. Let's make calculations:
ROI = (Profit – Expenses) / Expenses * 100% = (400,000 – (100,000 + 50,000)) / 150,000 = 166.7%.
ROMI = (Profit – Marketing Expenses) / Marketing Expenses * 100% = (400,000 – 100,000) / 100,000 = 300%.
ROI allows you to see that every rich people data package ruble invested in the business (including expenses on marketing and development of a new collection) allowed you to get a benefit of 1 ruble 66 kopecks. ROMI shows that every ruble invested in advertising contributed 3 rubles of income. Therefore, ROI demonstrates the overall profitability of the enterprise, covering all investments. At the same time, ROMI shows what part of the organization's income was provided by marketing investments.
The calculation results allow us to determine the most effective areas of marketing activities and intelligently adjust strategies to increase ROMI and ROI indicators.
Setting ROMI Goals and Benchmarks
Having understood the methodology for calculating ROMI, it is necessary to identify benchmarks and goals for managing the marketing strategy and making appropriate decisions.
An important point in analyzing the effectiveness of PR channels is to compare the return on investment in promoting an enterprise with industry-standard values. Such a comparison is the basis for assessing the profitability of marketing against the background of competing firms and other companies operating in a certain market segment.
How to determine the standard indicators for a specific ROMI industry? To do this, you should take the following steps:
Conduct an analysis of industry reports, surveys, and studies that provide information on average values for this metric in a given market segment.
Get qualified advice from industry experts, associations or partners, which will help you form an overall picture of ROMI.
Conduct an analysis of the financial performance indicators of enterprises - industry leaders. The information obtained will allow us to assess the ROMI level of such companies.
Please note: Standard ROMIs vary by industry, market, and company size. It is important to use data that best fits your business when analyzing your ROI.
Setting ROMI goals is important in the context of developing a marketing strategy and achieving maximum return on investment in advertising. To determine them, you should take into account the strategic objectives of business development, including increasing profits, expanding market presence or attracting customers. Aligning ROMI goals and the company's strategy will help achieve the planned results for the business.
For example, if you have planned to increase profits by 20% next year, you need to ensure that the ROMI coefficient is 2.0. That is, investments in advertising should generate income that is 2 times greater than their total amount. Setting this ROMI goal will help solve a number of problems. They are related to the formation of the right marketing strategy and t