2. Translation?
Return On Investment.
A performance measure:
Used to calculate the efficiency/effectiveness of an
investment. Measuring the amount of return compared to
that that was spent in an investment process.
3. How is it calculated?
The formula consists of the return of the investment being
divided by the cost of the investment, and the result is
displayed as a percentage or ratio.
4. For example, suppose _____ invested £1,000 in ‘PizzaIsLife’ and sold her shares for
a total of £1,200 a year later. To calculate the return on her investment, she would
have to divide her profits (£1,200 - £1,000 = £200) by the investment cost (£1,000),
for a ROI: so £200/£1,000 = 0.2 or 20%.
6. Is this relevant to us? To
Advertising?
The Social Media Examiner
http://www.socialmediaexaminer.com/measure-social-media-
roi/
7. Pros and Cons
Pros Cons
Can prove that the marketing efforts
are working
Can see which parts of the campaign
are working best and which aren’t
You can see if the campaign is
improving by repeatedly finding out
the ROI throughout it
Any changes that take place in the
social media campaign means that the
ROI needs to be constantly checked
It can be quite a tricky thing to do and
takes time.
You have to track your campaign
which can be hard if there’s lots of
parts to it
Measures success but doesn’t take
into account the period of time it may
have taken compared to other
investments.
