KPIMarketing

Return on Marketing Investment (ROMI)

Revenue generated relative to marketing spend

What is Return on Marketing Investment (ROMI)?

Return on marketing investment shows how much revenue marketing generates relative to what it spends. It is the whole-programme counterpart of campaign ROI and is usually reported for a quarter or a year.

It answers the question leadership most often asks of marketing: for every unit of currency invested, what came back? Because it works at programme level, it is used to compare marketing with other uses of the same money.

How this KPI is measured

Function: Marketing
Sub-function: Campaign Performance
Industry: All Industries
Type: Lagging
Impact: Revenue
Unit: %
Measurement frequency: Monthly / Quarterly
Formula: ((Revenue attributable to marketing − Marketing cost) / Marketing cost) × 100

How to calculate it

Subtract total marketing cost from the revenue attributable to marketing, divide by the marketing cost, and multiply by 100.

For example, if marketing spent 200,000 in a year and the revenue attributed to it was 800,000, ROMI is (800,000 - 200,000) / 200,000 x 100 = 300%.

The result depends heavily on how revenue is attributed and on what is counted as marketing cost. Agree both with finance so the number is credible.

Where it is used

Annual budget setting
Use the return achieved last year to argue for or against changing the budget.
Comparing investment options
Weigh marketing against other growth investments on a common scale.
Reporting to the board
Provide a single, well-understood measure of marketing's financial contribution.

How to improve it

Agree the definitions with financeSettle what counts as marketing cost and which revenue is attributable, and record the rules.
Report over a meaningful periodUse a quarter or a year, so revenue has time to follow spend.
Break the return down by channelFind which programmes earn the most and which drag the average down.
Reallocate towards higher returnsMove budget from weaker programmes to stronger ones, testing as you go.
Improve conversion, not just spendBetter conversion and retention raise the return without raising cost.

Tips and common mistakes

Compare with your own history and with the return needed to grow profitably, not with a generic benchmark.
Brand-building spend pays back slowly and is hard to attribute, so it can look worse than it is in a single period.
Watch out for double-counting revenue that sales also claims credit for.

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