ROI (Return on Investment)

ROI (Return on Investment) explained

A simple calculation is surplus divided by the defined cost basis, multiplied by 100. The surplus must already include the relevant costs for that analysis. If the starting figure is a return before costs, subtract those costs first. Do not deduct costs again if they have already been deducted.

For marketing projects, relevant costs may include media, strategy, production, management and delivery of the goods or services sold. What belongs in the numerator and denominator depends on the chosen model and needs an explicit explanation. ROAS instead relates attributed revenue to advertising spend; it is not a profit metric.

A positive ROI indicates a surplus within the chosen calculation. Fifty per cent is therefore not a loss: each euro in the cost basis produces 50 cents of surplus. Whether that result supports a decision depends on the period, risk and alternatives, among other factors. A universal minimum benchmark offers little help.

Even a correct calculation does not prove that a campaign caused all attributed revenue to be additional. Label such attribution and examine important assumptions. In Creative Engineering, we therefore consider the outcome alongside the full effort required to reach usable quality, including checking and rework. We take responsibility for the concept and quality.