Today, we’ll define ROI and explain its importance. We’ll cover the formula used to calculate ROI with understandable examples and offer additional tips for marketing measurement in the water and wastewater industry. Enjoy!
Return on investment — or ROI — is a key performance indicator (KPI) formula used by businesses and individuals to determine the profitability of an expense. Sometimes in marketing, we call it ROMI, a return on marketing investment. It’s useful for measuring the success of dollars spent over time and helps take the guesswork out of your future marketing decisions.
Calculating Marketing ROI / ROMI
Start With the ROI Formula
The ROI formula is: (Net Profit / Total Investment)100 = ROI.
A Simple Example
For simplicity’s sake, we’ll use small, whole numbers.
Imagine you spent $10,000 on a print advertising campaign with a targeted water and wastewater treatment publication during the first quarter of the year.
- Let’s imagine that your website traffic and inbound phone calls and emails increased remarkably.
- Your sales were boosted, with a net profit of $10,000 this quarter.
- 10,000 / 10,000 = 1
- (1)100 = 100
- Your Return on Marketing Investment is 100%
Naturally, a precise return of 100% on print advertising is outstanding and rare – miraculous, even! – but the point here is to understand the formula.
More Complicated ROI & ROMI Concepts & Concerns
In the real world, an advertising campaign with an immediate return of 100% would be exciting! Now that you’ve realized the potential return from this particular journal, you decide to double your advertising budget next quarter.
Come next quarter, you spend $20,000 with the same publisher and eagerly await your 100% return. Again, you notice a meaningful increase in leads and sales. But you don’t net $20,000 in new sales profits. We’ll say your net sales profit was $10,000 again.
- 10,000 / 20,000 = 0.5
- (0.5)100 = 50
- Your ROI this quarter is 50%.
Now, a 50% immediate net return is still outstanding. In the realm of water and wastewater, we know that a return isn’t always quick. Sometimes there are lengthy bidding and quoting processes involved. Perhaps there’s been a change in your local market, like a new competitor or a new technology.
Media changes too. While we would never go quite so far as to call print advertising a dinosaur, marketing dollars are often better spent on digital media like websites, social media, and email advertising campaigns.
Measuring Returns in the World of Water
While a meaningful ROI is an essential tool for considering future advertising buys, this rabbit hole goes deeper.
- Media is dynamic — it’s always changing.
- Social media platforms rise and fall.
- Industry publications experience peaks and valleys in subscription engagement.
- Voice search replaces local search, which competes with paid search. On and on it goes.
So it’s important to segment and monitor your marketing activities. And great marketing professionals monitor each campaign’s successes and challenges, across multiple media streams, over periods of months, quarters and years.
Our Offerings at BB Communications Group
The team at BB Communications Group serves the water industry exclusively and has been for 20 years. We know that every water treatment organization – from manufacturers to rep, engineering firms to utilities – is unique. As marketing communications professionals, we help water and wastewater companies tell the fascinating stories that make each organization exceptional.
BB Communications Group is uniquely qualified to understand the moving parts of a large corporation or the budget constraints of a young start-up. Contact us to learn how we help with advertising, website development, case studies, search engine optimization (SEO), image development and branding. Marketing for the water and wastewater industries is our unique specialty.