Marketing ROI vs ROMI (Return on Marketing Investment)

The Upfront Analytics TeamEducation, Strategy5 Comments

Businessman drawing ROI (return on investment) with graphs

What’s the Difference Between ROI vs ROMI (Return on Marketing Investment)?

As far as business buzzwords go, ROI practically has celebrity status, making an appearance at every planning meeting. And why not? Knowing that what you’re investing in business is making a positive impact is a necessary part of planning strategy going forward. But while ROI is useful for initiatives like switching to a new supplier or changing sales tactics, determining an ROI for marketing can cause some confusion. Because marketing is the sum of all of its parts and not just a simple cause and effect game, new metrics should be applied to really determine the worth of marketing.

Enter ROMI–return on marketing investment. Instead of asking “What did we spend and how much did we make,” ROMI asks “What is the true value that our marketing efforts offer the organization?” By changing the way you think about marketing investment, you can gain a more accurate idea of just how marketing is affecting your bottom line.

ROI Limitations

It’s true that ROI is typically the gold standard for discerning the value of various initiatives and measures, but it offers some severe limitations; particularly when dealing with marketing efforts. For one, ROI is typically a short-term metric and deals with numbers alone–input versus output. As a budget line item, ROI leaves little room to measure anything but revenue, and certainly not returns such as attitude toward the company, future spend, and customer engagement.

Utilizing ROMI, however, offers more flexibility in which factors are measured to determine success. Instead of simply distilling efforts back to a net profit value, it’s possible to gather competitive intelligence based on factors other than money.

Using ROMI

An organization’s ROI for any given measure changes based on spending levels, but ROMI is less about a number and more about balance. Instead of asking “Did we recoup our costs?” ROMI can be used to determine if you’re spending too much, too little, or just enough on marketing.

It’s impossible to measure the true breadth of marketing when you’re going be the numbers alone. You might be able to calculate the total revenue generated by a new marketing campaign, but wallet share is not the only indication of attitude or buying propensity. It’s the net benefit of a campaign that is the bottom line–not just the dollars earned.

If a marketing campaign doesn’t generate many sales, but increases social media mentions, is it still considered a flop? Relying on ROMI means looking beyond the obvious benefits and measuring the reach of a marketing campaign. Don’t make the mistake of dismissing ROMI as just another buzzword du jour: It could be the key to unlocking the secrets of marketing metrics.

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