Globally it is estimated that more than a trillion and a half US dollars was spent on marketing annually in 2014, with the figure set to top the two trillion figure by the year 2019. While this clearly is a huge figure, not all of it is used up correctly. Thus the concept of Marketing Return on Investment (MROI) must be used up. It helps in several ways such as in justifying marketing spend and deciding on the heads to spend on. It provides business analytics to compare on trends against competitors. MROI also helps companies in being accountable to the tasks they were set such as handling customers and sales. MROI can be calculated using the formula where the cost of the marketing investment gets deducted from the incremental financial value gained as a result of the marketing investment and the resultant figure is divided by the same cost of the marketing investment. There are some challenges though, notably in social media induced digital marketing where the returns sound good when only measured against the tech investment but comes down substantially when the personnel costs get added up. A common fallacy meanwhile with MROI is that only incremental sales margins are given preference as opposed to long-term gains from marketing efforts.

Source:https://hbr.org/2017/07/a-refresher-on-marketing-roi?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29

Uploaded Date:28 July 2017