What is ROMI?

The Return on Marketing Investment or ROMI is a quantified measure of marketing impact, or the business value of marketing.

The metric is sometimes referred to as Return on Advertising Spend (ROAS). At its most basic, ROMI is a simple formula subtracting cost of marketing from the business value it generates.

While the formula is simple, the challenge is how each formula component is determined and calculated.  Below are just a few of the examples of the range of costs and returns.

The cost of marketing can include a wide range of values based on the type of marketing effort measured, and the degree of costs included:

• One specific standalone marketing initiative
• Large integrated multi-component initiatives
• Complete marketing mix for all activities
• Internal resource costs
• Technology costs
• Comprehensive costs including all connected to marketing
  
  

The value generated by marketing covers a similar range of return types as well as the degree of return considered:

• Revenue
• Profit
• Baseline lift
• Comparable costs (e.g., measuring cost savings or non-financial metrics)
  
  

As financial measurement has been an intense business focus for decades, marketers (and the business) strive to accurately calculate the true business value of marketing.   While there is no consensus on the methodology or definition of variables, businesses can gain useful insight by using the approach that most fits the needs of the value question they seek to answer: e.g., determining total revenue marketing value, measuring profit of specific marketing initiatives, measuring other non-financial equivalents.

Learn more about ROMI here.