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Return on Investment (ROI) – Calculation and investment calculation in marketing

Return on Investment (ROI) – Calculation and investment calculation in marketing

Return on Investment (ROI)
Return on Investment (ROI)

The Return on Investment (ROI) is one of the most important metrics in both business administration and digital marketing. It shows how profitable a single campaign or operational area is in relation to the investment made. In social media marketing, ROI helps determine whether your budget is being used effectively — and where optimization is needed.

ROI calculations enable marketers and decision-makers to:

  • Analyze and compare different departments or campaigns

  • Evaluate the performance of past investments

  • Plan and control future marketing spend

Before launching a campaign, a solid concept, detailed strategy, and proof of concept are essential. With continuous optimization, campaigns become more efficient — unprofitable efforts are paused, while high-performing strategies scale. Eventually, the campaign reaches its goal: a positive return on investment.


Concept and strategy

Depending on the goals pursued in social media marketing, the corresponding concepts and strategies know each other.

Whether influencer campaign on YouTube, or media budget for the advertisement, with re-targeting for your own online shop. In all cases, certain funds are invested in order to achieve a certain objective. The question now is, which campaign promises more profitability? Which campaign brings more profit, per invested Euro?

Costs are an extremely important factor right from the start, in terms of concept and strategy. Ultimately, the campaigns are limited to a certain period of time. Sometimes by a fixed budget, sometimes by seasonal characteristics (fashion), sometimes by the half-life of the product, e.g. with trend products, or also video games, whose platform is constantly technically accessible.

Now in social media marketing we have different possibilities on our desk. Community Management, Advertisements on Facebook, Advertisements on Instagram, Advertisements on YouTube, Organic Reach, we all video clips, the whole range of possibilities is open to you. In order to make a comparison, the key figures of the individual divisions are taken into account.


Calculation and example

You have a media budget of 50.000 €. With this budget you ideally want to implement as much as possible. As much reach as possible, as much sales and as much turnover as possible. If your expected turnover is then 70.000, your return of invest is 0.40


Formula for calculation

  • Profit generated / capital employed = ROI

  • 20.000 Euro / 50.000 Euro = 0.4

The return of invest now means that you will earn 40 cents for every euro you spend. If you now compare different campaigns with each other and compare their costs as well as the expected profits, you can make statements about which social media campaign you invest in and which not.


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©2025 All rights reserved. Angels Academy LLC. 1209 Orange Street, Wilmington, Delaware

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