How to measure the return on digital advertising

Author of the article

Mykyta, marketing manager at VAU Agency

ROI (Return on Investment) is a key indicator of the effectiveness of any marketing campaign, allowing you to understand how much investment in advertising has paid off. In simpler terms, it is an indicator of how much money you have earned for every hryvnia/dollar invested.

This indicator is calculated by the formula:

ROI = (Net return on investment / Total investment costs) * 100%.

EXAMPLE OF ROI CALCULATION BASED ON GOOGLE DATA:

Let's assume that the cost of the agency's services for setting up targeted advertising is 30,000 UAH.

ROI = (1,242,880.90 - 375,172.34 - 30,000) / (375,172.34 + 30,000) * 100% = 206.75%.

This is an effective advertising campaign, so it should be continued.

Tracking ROI is an important part of marketing because it gives you insight into the effectiveness of individual campaigns and digital marketing in general. But it's always better to check the data from ad accounts with the actual data in the CRM system/sales table.

EXAMPLE OF ROI CALCULATION BASED ON META:

Let's assume that the cost of the agency's services for setting up targeted advertising costs 30,000 UAH.

ROI = (145 043 - 30 000 - 65 996.28) / (30 000 + 65 996.28) * 100% = 51.09%.

The campaign is unprofitable, so we turn it off!

Google advertising account

WHERE AND WHAT DATA TO USE FOR CALCULATIONS?

The two main advertising platforms are Meta and Google.

To begin with, you need to calculate the costs of advertising activities: the advertising budget, the team of executors (if you are not running ads yourself), etc.
Then, using Facebook Pixel or Google Ads Conversion Tracking and Google Analytics, you can calculate your advertising revenue.
The next step is to calculate the net profit - subtract expenses from revenues.
Use the formula above to calculate ROI.

Meta advertising account