How can businesses calculate their marketing value?

The ROMI formula can be used to calculate the value of marketing, and is flexible enough to measure total marketing value, specific initiative value, using multiple value types.

Return on Marketing Investment, or ROMI, is a simple formula, usually used to calculate the financial value generated by a marketing initiative or set of initiatives.

Because each term in ROMI can represent a wide range of values, businesses can use ROMI to calculate dozens of value types depending on what specifically the business needs to understand. For example, at its most basic, ROMI can be used to calculate the total value generated by the total cost of marketing in a fiscal year.  For more targeted values, ROMI can calculate the specific value generated by one specific marketing initiative. Marketing costs can include just the cost of ad spends, or the cost of all development for the marketing considered, or the full cost of technology and personnel. The value generated can be measured as revenue, profit, amount over a baseline, or comparable non-financial costs such as Share of Voice, or increased organic traffic, etc.

For effective and accurate measurement of marketing value, each businesses must determine specifically which question they wish to answer based on actionable insights sought.

• What should the marketing budget be for next year? (What is the typical annual revenue return on marketing for the last 3 years?)
• Which marketing initiatives should be continued? (Of the last 3 channel-specific marketing initiatives, which generated the most profit?)
• How does our brand benchmark against top competitors? (Using market research and competitor records, how much comparative value do the brand’s similar marketing initiatives generate?)
• Which segment and channel generates the most value for marketing initiatives? (Combine other data sources, such as a CRM, CDP, Google Analytics, and calculate ROMI while segmenting audiences and channels.)

Each business must determine the specific goal for each ROMI calculation, define the formula variables, and communicate to stakeholders exactly what is being measured. The marketing analytics must also be capable of defining attribution, isolating elements of a complex marketing mix, and understanding the duration of impact for marketing value.

Learn more about ROMI here.