Question

What does the industry acronym ROMI stand for and what is the importance of ROMI in the field of marketing communication measurement? How is it measured and used by clients and agencies in evaluating the impact of effectiveness of a campaign?

Answer 1

ROMI meas Return on Marketing Investment. It is used to measure the overall effectiveness of marketing that is done by a marketer.
ROMI helps to calculate how much revenue is generated or how many customers are acquired by marketing thus calculation the cost per customer in terms of marketing. It helps in financing the budget for marketing campaigns with proper calculation rather than just hit and trial.
ROMI is calculated in percentage and the formula is
ROMI= [(Total Revenue- Total expenditure on marketing/investment) / Total expenditure on marketing/investment ]* 100
ROMI is the excess of revenue over marketing cost/investment which is divided by the marketing cost/investment and then multiplied by 100.
The value of ROMI can be both positive as well as negative.
Positive value represents good marketing generating more customers whereas negative value shows a bad marketing or that cost is unable to generate sufficient revenue.
The greater the positive value, the more effective the marketing is.
Return on marketing investment can also be in ratio if we don't multiply by 100.