Chapter 02

Defining return on marketing investment (ROMI)

The purpose behind this tool is to provide a step-by-step guide to calculate financial payback and the profit generated from marketing.

One of the best ways of reporting financial payback is through the concept of return on investment (ROI). Return on investment is an accountancy concept with well-defined meaning: It is simply the ratio of net profit generated by an investment. As this tool looks at the payback on marketing investment, this correctly should be referred to as return on marketing investment (ROMI).

ROMI = (incremental net profit) / (cost of campaign) x 100%