ROI(Return on Investment )
ROI (Return on Investment)
Today, more people are familiar with the concept of investment and are always looking for the best investment option so that in addition to preventing the decrease in the value of their wealth, they can earn profit from their capital. With so many and varied investment options, people get more confused to choose, so it is necessary to have a standard to measure investment opportunities. A simple and very useful measure in measuring different investment options and opportunities is a concept called ROI.
What is the rate of return on investment (ROI)?
The rate of return on investment, known as ROI, is one of the key performance indicators and measures that show the success rate of an advertising campaign. Even many experts and specialists believe that when formulating marketing and advertising strategies, especially in the field of digital marketing, the rate of return on investment should be considered as the main criterion and the strategy should be formulated based on it.
If we want to simply say what ROI is, perhaps the best definition for the rate of return on investment is the ratio of profit obtained to the amount of cost and capital paid. Of course, the profit obtained may not only have a financial aspect and include non-financial items such as branding, but in general, the purpose of calculating the rate of return on investment is the income and financial profitability of the business.
When can the rate of return on investment be calculated?
The rate of return on investment can be calculated in all stages of your work, but it may not show you an exact number in each time period. The implementation of your SEO plans and the efficiency of these plans are time-consuming processes, and you have to wait several months to calculate the rate of return on investment. An exact time frame cannot be given because everything depends on the amount of your activity and its quality.
The formula for calculating the rate of return on investment (ROI):
Return on investment = (total cost – total revenue) / total investment
The annual rate of return on investment
In this type of calculation, the rate of return is calculated annually and with a time interval that can increase the accuracy of the work:
Percentage annual rate of annual return on investment=× [(1+ROI)1/n −1]100
In this formula, the value of n is equal to the duration of the investment, and the amount of ROI is the rate of return on your investment in the period of time n.
What are the ways to improve the rate of return on investment?
Generally Optimizing images, producing valuable and diverse content, using internal links, etc. are some of the ways to improve the rate of return on investment.
What is the use of ROI?
After understanding what ROI is and how it is calculated, now it’s time to see what ROI is and where we can use it. Perhaps it is easy to guess the application of ROI in the organization and formulation of marketing strategies.One of the main uses of ROI is when you want to see what output you got in return for the investment made and how much the profit was.
If we want to state the benefits of accurately measuring the rate of return on investment, we can mention the following most important things:
Measurement of the quality and amount of output and profit obtained in exchange for the cost and investment
Investigating the value of a customer in the long term
Evaluating the performance of the marketing team in optimizing costs and saving in exchange for getting the best results
Investigating the potential and capacity of marketing programs for return on investment in the short or long term
Measuring the performance of different marketing plans and how customers and audiences interact Providing new products in line with the business’s income and profitability policies
SEO site and rate of return on investment
Website SEO is very variable and one solution cannot be used for a long time. Your solution may be responsive now and attract many visitors to your website, but after some time, it will no longer be profitable for you. Therefore, in order to put your ROI in a good condition, you should constantly check your SEO activities or consult an SEO expert in this field and entrust your website activities to him.
This criterion cannot be used as the only criterion for evaluating different investment options, and other criteria should also be used to choose between different investment options.
