Return on Investment (ROI) is a core financial metric used to evaluate the profitability of an investment. In marketing, it measures how much revenue a specific campaign generated compared to the cost of running that campaign.
The basic formula is: (Net Profit / Total Investment) x 100. For example, if you spend $1,000 on a Facebook ad campaign and it generates $5,000 in sales (with a $2,000 profit margin), your marketing ROI is 100%. Tracking ROI allows businesses to identify which marketing channels are driving actual business growth and which ones are wasting budget.