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Marketing ROI (return on investment) shows how much profit your marketing brings in compared with what it costs. The basic marketing ROI formula is: (profit from marketing minus marketing cost) divided by marketing cost, times 100. A result of 100% means every dollar spent brought back two dollars of profit: one to cover the cost and one extra. Measuring it tells you which marketing to keep, fix or stop.
What is ROI in marketing?
ROI in marketing compares what you got back from a campaign or channel with what you put in. It turns marketing from a cost you hope works into an investment you can measure. You can calculate it for your marketing overall, for a channel such as Google Ads, or for a single campaign.
How do you calculate ROI in marketing?
The marketing ROI formula:
Marketing ROI = (gross profit from marketing − marketing cost) ÷ marketing cost × 100
Use gross profit (revenue minus the cost of delivering the product or service), not revenue, if you can. Revenue alone makes ROI look better than it is, because it ignores what the sale cost you to deliver.
A worked example
These numbers are made up to show the maths. A business spends $2,000 on a month of Google Ads, including management. The ads bring in 10 new customers, worth $8,000 in sales. The gross profit on those sales, after materials and labour, is $4,000.
- Gross profit from marketing: $4,000
- Marketing cost: $2,000
- ROI = ($4,000 − $2,000) ÷ $2,000 × 100 = 100%
Using revenue instead would give ($8,000 − $2,000) ÷ $2,000 × 100 = 300%, which overstates the real return.
How do you measure marketing ROI?
- Set a goal and a time frame for the campaign or channel.
- Track every cost: ad spend, agency or staff time, design, tools and printing.
- Track where customers come from: use Google Analytics 4, call tracking, unique offer codes and “how did you hear about us?” on every form and call.
- Connect leads to sales: a CRM or a simple spreadsheet showing which enquiries became customers and what they spent.
- Work out gross profit from those sales.
- Calculate ROI with the formula above, then compare channels.
Our GA4 guide explains how to set up conversion tracking on your website.
How do you measure ROI on marketing spend by channel?
| Channel | How to track results | Watch out for |
|---|---|---|
| Google Ads | Conversion tracking, call tracking, enquiries by campaign | Counting clicks instead of enquiries and sales |
| SEO | Organic enquiries in GA4, Search Console, leads by landing page | Judging it too early: results build over months |
| Social media | Tagged links, offer codes, messages that turn into bookings | Reach and likes are not sales |
| Clicks and sales from each email, using tagged links | Ignoring repeat customers who buy later | |
| Print, radio, events | Unique phone numbers, offer codes, “how did you hear about us?” | Forgetting to ask |
What is digital marketing ROI?
Digital marketing ROI is the same calculation applied to online channels. It’s often easier to measure than offline marketing, because clicks, forms and online sales can be tracked automatically. The hard part is connecting online activity to offline sales, such as a phone call that turns into a job weeks later, so combine your tools with a simple record of where each customer came from.
Are marketing ROI benchmarks useful?
You’ll see “good” marketing ROI figures quoted online, but they vary so much by industry, margins, customer value and channel that a general benchmark is rarely useful. A better benchmark is your own: your break-even point (0% ROI), your results last quarter, and the return from each of your channels compared with the others. Improving your own numbers over time is what counts.
Why is marketing ROI hard to measure?
- Customers use several channels before they buy, so it’s hard to credit just one.
- Some marketing works slowly, such as SEO, content and brand building.
- Offline sales are harder to link back to online marketing.
- Customer value builds over time, so a first sale understates what a loyal customer is worth.
Include customer lifetime value where you can: if a new customer usually buys several times, the real return is higher than the first sale suggests.
How do you measure ROI from a digital marketing agency?
Ask your agency to report on the numbers that matter: enquiries, cost per enquiry and, where you share sales data, customers and revenue from each channel. Agree the tracking at the start, review monthly, and compare the agency’s total cost (fees plus ad spend) with the gross profit from the customers it brings in. A good agency will want to show you this.
How we help
We set up tracking at the start, so you can see enquiries and cost per enquiry by channel each month. Our Google Ads management and SEO plans report on enquiries, not just clicks and rankings, and our marketing partnerships (from $4,500 + GST a month for 28 hours) include HubSpot reporting across channels.
Frequently asked questions
What is a good marketing ROI?
Any ROI above 0% means the marketing paid for itself and made a profit. What’s “good” depends on your margins and goals, so compare against your own past results and your other channels.
Is there a marketing ROI calculator?
You can use a simple spreadsheet: one column for gross profit from marketing, one for cost, and the formula (profit − cost) ÷ cost × 100.
What’s the difference between ROI and ROAS?
ROAS (return on ad spend) compares revenue with ad spend only. ROI compares profit with the total marketing cost, including management, design and tools, so it’s a stricter measure.
How often should I measure marketing ROI?
Monthly for paid channels, and quarterly or longer for slower channels like SEO and content.
The short version
Marketing ROI = (gross profit from marketing − marketing cost) ÷ marketing cost × 100. Track every cost, link enquiries to sales, use profit rather than revenue, and compare channels against your own numbers rather than general benchmarks.
If you’d like help measuring what your marketing brings in, book a free 30-minute discovery call.
