What is ROI?
ROI is an abbreviation for "return on investment" and it tells how much revenue you are getting back for each $1 you spend (invest). A positive return on your investment means that you're making more than you've spent. A negative return on your investment means that you're losing money on your investment.
To calculate ROI divide the amount returned by the amount invested.
ROI in practice:
You invest $25 in advertising. After a week of advertising, you make $60 back.
ROI = 60 (the amount you made) / 25 (the amount spent) = 2.4
In the above scenario, you made back 2.4x what you spent, or $2.40 per $1 you put in. You're making more money than you're losing, which signals that your investment is worthwhile.
How do I know how much ROI my campaign is generating?
We will automatically display your account's ROI on your dashboard if we have the information we need to calculate it for you.
In order to know how much you're making back on your campaigns, we need to know:
- What a success is to you
- The value of each success
The way you define a success is by creating a conversion segment. To learn more about setting conversion segments up, click here.
1. Fixed value
When you create your conversion segment, there is an option to add a conversion value. A fixed value for each conversion means that each conversion is worth the same amount to you. If order values for your business do not change much from order to order, this is a good option for you as it is easy to add to your conversion segment.
If you already have a conversion segment, edit it to add a conversion value. The conversion value you add will apply to conversions going forward.
To calculate how much revenue your campaign has generated (for fixed values), multiply the number of attributed conversions by your conversion value.
Calculating attributed revenue with a fixed conversion value:
You set your conversion value as $20, and subsequently we log 20 conversions that can be attributed to one of your campaigns.
Attributed revenue = $20 x 20 = $400
2. Dynamic value (Enhanced Conversion Tracking)
If you have an e-commerce store, order values will most likely differ from customer to customer. In this case, it is more accurate to use enhanced conversion tracking to dynamically capture your order values (translation: capture what your customer actually spends on their order).
- For an explanation of how enhanced conversion tracking works and general instructions for setting it up, click here.
- Check if we have specific enhanced conversion tracking instructions for your platform, here.