Definition and calculation of ROI
One of the most important outcomes from Marketing Mix Modeling is the Return on Investment (ROI) for marketing investments. This is sometimes also referred to as ROMI (Return On Marketing Investments). ROI is a key metric in measuring marketing's performance, and enables comparing media (or campaigns) against each other in financial terms.
ROI is typically calculated as 'Sales ROI', i.e. how many Euros/Dollars of sales did one Euro/Dollar invested in marketing bring back. This is calculated as follows:
ROI can also be calculated as 'Margin ROI', i.e. how many Euros/Dollars of margin (e.g. gross margin) did one Euro/Dollar invested in marketing bring back:
ROI calculation always needs the estimate for marketing's incremental impact on company's sales or margins, which is given by the Marketing Mix Model (this guide explains how Marketing Mix Modeling works).
Reading ROI charts: Overview
If you look at demo of Sellforte's product (https://demo.sellforte.com/), you can find ROI in multiple places. First the "KPI"-tab shows the total Sales ROI for marketing investments.
Reading ROI charts: Table-view
Secondly, the "Table"-tab shows the Sales ROI for each Ad Network. In the demo, the user can group the uplifts differently, for example by campaign type or country. In the real customer user interfaces the "group by"-options will differ based on customer scope and data.
Reading ROI charts: Bar chart
In the "Chart"-tab, the user find visual representation of the Table-view.
By pressing "Show all charts"-button on the top-right corner in the same view, one can also find an even more comprehensive visual representations of the table.
Reading ROI charts: ROI bubbles
"ROI Bubbles"-tab is one the most popular views in Sellforte for comparing media or campaigns. In this view,
Y-axis is the Sales ROI of the medium
X-axis shows the incremental sales of the medium
Bubble size and the text next to the bubble is the amount of media investments
The ROI calculation in this articale reveals the average ROI for a given time period. In reality, ROI can vary over time, depending on various factors. For example, ROI of marketing investments typically decreases if marketing investments are increased. This is called the diminishing returns effect: read more here.