How to Calculate Marketing ROI: A Simple Guide

Marketing ROI seems straightforward: revenue from marketing divided by marketing costs. But true ROI calculation is more nuanced than this simple formula suggests.

The Basic Formula

At its simplest, Marketing ROI = (Revenue from Marketing - Marketing Costs) / Marketing Costs × 100

But this basic formula misses several important factors.

Including Customer Lifetime Value

If you're only counting immediate revenue, you're underestimating your ROI. A customer acquired through marketing doesn't just generate revenue once—they generate revenue over their lifetime.

Calculate LTV-based ROI: (LTV × Number of Customers - Marketing Costs) / Marketing Costs × 100

Attribution Challenges

Modern customers interact with multiple touchpoints before converting. Proper attribution ensures you're crediting the right channels with the right value.

Indirect Benefits

Marketing also generates indirect benefits: brand awareness, customer education, and competitive positioning. While harder to measure, these shouldn't be ignored.