E-commerce Challenges: How to Calculate ROI
Posted: Wed Dec 04, 2024 3:24 am
To ensure that your investments are always optimized and have increasingly better performance, it is essential to measure them systematically. With this in mind, we created this post on how to calculate ROI, to show the importance of this monitoring for your company to develop results-driven marketing.
Interested? Then read our article right fiji business email list now about one of the challenges of e-commerce: calculating and maintaining a good return on investment.
Content
What is return on investment?
What can he calculate?
How to calculate this return?
How important is this measurement?
What is return on investment?
To build a good marketing strategy, it is necessary to measure the return on investment made. To make this calculation, many companies use ROI. Do you know what ROI means ?
This acronym comes from English (Return On Investment) and means the return from each investment you make in digital marketing. It aims to calculate how much money you returned on the investment made, making it possible to evaluate the effectiveness of a campaign or an entire period.
What can he calculate?
It allows you to evaluate the performance of the money spent in the short, medium and long term. When measuring the return on investment, the values of immediate sales are taken into account. For example, your company ran a sponsored links campaign on Google AdWords. To measure the ROI, we calculate how many reais were generated in sales for each real invested in this campaign.
However, many customers who purchased for the first time on an occasion like this may return in the future to make new purchases. Therefore, investments often bring returns in the medium and long term, appearing in Google Analytics as a sale from “direct access” normally. This type of sale makes it impossible to calculate the ROI, so we have to focus on calculating short-term ROI to have a 100% accurate measurement.
How to calculate this return?
ROI in digital marketing is calculated using the following formula:
ROI = Revenue obtained from
Investment
In other words, it is necessary to divide the Revenue by the value of Investment in the campaign or in the period in a given media.
For example: an online cosmetics store invests R$500.00 in Instagram ads and manages to sell R$4,000.00 in products as a result of this investment.
Putting it into the formula, simply divide the revenue (4,000) by the investment (500), obtaining the ROI value which, in this case, was 8.
This means that for every R$1.00 invested, R$8.00 in revenue was generated . Another interpretation we can make, by dividing 1 by 8, is that 12.5% of the revenue obtained was spent on marketing.
How important is this measurement?
For a marketing campaign to be successful , one of the challenges of e-commerce is to always measure the ROI of each of the media you work with. By calculating this, you can know which media generate better results and which ones don't bring a good return. This makes it easier to optimize your marketing investment!
By measuring ROI, anything that doesn’t generate a good return can be removed from the strategy, reducing the waste of time and money on ineffective strategies. At the same time, it is possible to increase investments in tactics that bring a better ROI, making marketing spending more assertive.
So, are you ready to face one of the main challenges of e-commerce and greatly improve your return on investment in digital marketing? Then start putting this metric into practice and good luck!
And, to receive other content like this, be sure to subscribe to our newsletter.
Interested? Then read our article right fiji business email list now about one of the challenges of e-commerce: calculating and maintaining a good return on investment.
Content
What is return on investment?
What can he calculate?
How to calculate this return?
How important is this measurement?
What is return on investment?
To build a good marketing strategy, it is necessary to measure the return on investment made. To make this calculation, many companies use ROI. Do you know what ROI means ?
This acronym comes from English (Return On Investment) and means the return from each investment you make in digital marketing. It aims to calculate how much money you returned on the investment made, making it possible to evaluate the effectiveness of a campaign or an entire period.
What can he calculate?
It allows you to evaluate the performance of the money spent in the short, medium and long term. When measuring the return on investment, the values of immediate sales are taken into account. For example, your company ran a sponsored links campaign on Google AdWords. To measure the ROI, we calculate how many reais were generated in sales for each real invested in this campaign.
However, many customers who purchased for the first time on an occasion like this may return in the future to make new purchases. Therefore, investments often bring returns in the medium and long term, appearing in Google Analytics as a sale from “direct access” normally. This type of sale makes it impossible to calculate the ROI, so we have to focus on calculating short-term ROI to have a 100% accurate measurement.
How to calculate this return?
ROI in digital marketing is calculated using the following formula:
ROI = Revenue obtained from
Investment
In other words, it is necessary to divide the Revenue by the value of Investment in the campaign or in the period in a given media.
For example: an online cosmetics store invests R$500.00 in Instagram ads and manages to sell R$4,000.00 in products as a result of this investment.
Putting it into the formula, simply divide the revenue (4,000) by the investment (500), obtaining the ROI value which, in this case, was 8.
This means that for every R$1.00 invested, R$8.00 in revenue was generated . Another interpretation we can make, by dividing 1 by 8, is that 12.5% of the revenue obtained was spent on marketing.
How important is this measurement?
For a marketing campaign to be successful , one of the challenges of e-commerce is to always measure the ROI of each of the media you work with. By calculating this, you can know which media generate better results and which ones don't bring a good return. This makes it easier to optimize your marketing investment!
By measuring ROI, anything that doesn’t generate a good return can be removed from the strategy, reducing the waste of time and money on ineffective strategies. At the same time, it is possible to increase investments in tactics that bring a better ROI, making marketing spending more assertive.
So, are you ready to face one of the main challenges of e-commerce and greatly improve your return on investment in digital marketing? Then start putting this metric into practice and good luck!
And, to receive other content like this, be sure to subscribe to our newsletter.