How do you justify your marketing spend?

How do you justify your marketing spend and budget allocation?

A crucial part of any advertising campaign is the ability to measure it’s success.

You need to be able to accurately calculate the marketing ROI (Return on Investment) your marketing efforts are delivering for your Company.

The basic formula used to calculate Marketing ROI is

(Sales Growth – Marketing Cost) / Marketing Cost = Marketing ROI

A good Marketing ROI is around 5, with an exceptional ROI being around 10. Anything under 2 is usually not considered profitable

HERE IS AN EXAMPLE FOR A REAL ESTATE AGENCY

Sales Growth = €4,500 (3% commission on a property sold for €150,000)

Marketing Cost = €390 (Annual package price with a property portal)

Calculation

(4500 – 390) / 390 = 10.54

BUT WHAT DOES THIS MEAN?

Only 1 sale per year through the property portal would achieve an exceptional Marketing ROI

The above example is for a Real Estate Agency, but the same principles apply to any industry.

Non-financial elements can also determine if a marketing strategy is successful. These could include follows or likes on social media, website traffic, brand awareness or customer relationships. Campaigns focused on these initiatives can take months or years before marketers see the full impact.