Return on Marketing Investment (ROMI)
What is Return on Marketing Investment (ROMI)
Return on marketing investment (ROMI) is a financial ratio that measures the profitability of a company's marketing efforts. It is calculated by dividing the company's marketing-generated profit by its marketing expenses and expressing the result as a percentage.
Marketing-generated profit is the profit that can be directly attributed to the company's marketing activities. It is calculated by subtracting the company's marketing expenses from the revenue generated by its marketing efforts. Marketing expenses include all costs associated with the company's marketing efforts, such as advertising, promotions, and market research.
ROMI is used to evaluate the effectiveness of a company's marketing efforts in terms of their impact on the company's bottom line. A high ROMI indicates that the company's marketing efforts are generating a good return on investment, while a low ROMI may indicate that the company's marketing efforts are not generating enough profit to justify its cost.
ROMI can be a useful metric for assessing the effectiveness of different marketing campaigns and for making informed decisions about marketing spending. It is particularly useful for companies that operate in highly competitive markets where the impact of marketing on profitability is significant.