How to Calculate Marketing ROI: Expert Tips for Marketers

As a modern marketer, you’re constantly surrounded by data. It’s coming at you from every direction with different channel metrics, digital ad spend, and financial outcomes.

But when leadership asks, “What did we get from this spend?” proving your accomplishments can feel challenging. Knowing how to calculate ROI in a way that’s consistent, credible, and aligned with finance is something successful marketers have to do every day.

Top CMOs don’t just look for results. They expect their teams to understand which costs matter, how attribution really works, and how to translate marketing performance into financial terms the business will trust.

So, if you’re at a loss for how to figure out if your marketing investments are paying off, let’s review what to factor in when calculating the value of your efforts.

In this guide, we’ll go over the central elements of marketing ROI, how to partner with finance to standardize your approach, and how companies use Domo to connect spend and revenue data so they can communicate ROI with confidence.

If you want to think more like a marketing leader—and answer ROI questions before they’re asked—this is where to start.

What is marketing ROI and why it matters

Creative marketers may be able to conceptualize 400 fabulous ideas to convert prospective clients into paying customers. But if only four out of those 400 ideas actually work, it makes no sense to waste money on the 396 others, no matter how fresh or splashy they may appear.  

That’s why calculating marketing ROI is so important; it’s the way you use your marketing spend wisely on campaigns and channels that are proven to create value for your company.  

Marketing ROI measures how well your marketing investments generate business value. At its core, it answers the question every CMO and CFO wants to know: “Did this spend make a difference and can we prove it?”

Marketing performance measurement isn’t just another random metric. For marketing professionals, calculations like ROI can serve as a guidepost, directing them toward investments that generate revenue and allow them to forecast the impact of their campaigns more accurately. This way, they can budget better while connecting with the people they need to reach.  

Understanding how to make the most of the marketing budget is obviously crucial for smaller businesses that can't throw money at fun experiments that might not pay off. But these days, CMOs and CFOs at large organizations are also looking for proof that their marketing teams are operating efficiently and improving the bottom line.  

At every level of the organization:

• Marketing leaders need ROI to justify budgets and demonstrate impact. ‍
• Finance teams rely on consistent, credible ROI data to evaluate investments. ‍
• Analysts and marketing leads use ROI to prioritize, optimize, and tell a clear story about performance.

Key elements to include in marketing ROI calculations

If you’re struggling to determine how to calculate ROI in marketing, it doesn’t have to be complicated. A simple marketing ROI formula is:  

Marketing ROI = (Revenue from Marketing - Cost of Marketing) / Cost of Marketing X 100

If you spent $20,000 on digital ads and you sold $80,000 worth of clothing from those digital ads, your marketing ROI is 300 percent—a nice and neat calculation.  

Unfortunately, that’s not often how ROI in marketing works As Lauren Lang, director of marketing at Uplevel, points out, “ROI is actually kind of a contentious topic in marketing, and in content and brand marketing specifically.” She adds, “It depends on how you are defining it. If you are looking for a true mathematical number calculated as money made minus money spent divided by money spent, you’re going to run into trouble.”

That trouble can stem from a multitude of reasons.  

“Those calculations only work when there are true beginning and end dates to an investment, and marketing impact on brand is cumulative and ongoing,” she points out.  

Money made may therefore not be attributable to a single marketing activity like a digital ad. There are more likely multiple touchpoints throughout a customer's journey to purchase, which might include interacting on social channels, email promotions, and even in-person events. That can significantly complicate how you attribute revenue to a marketing tactic, which then complicates your marketing ROI formula.  

And, on the cost side, there are other factors that you may need to consider when determining the true amount spent to roll out a tactic.  

Variable costs

These are the costs that may increase or decrease based on how much marketing activity your team engages in. Examples include:  

1. Media spend: Your costs for advertisements on television or in a digital space are going to directly depend on how many advertisements you run or place. If you’re looking for more real estate, it will come at a higher price. ‍
2. Agencies fees: If you hire a marketing agency to create content for your website, you’ll likely need to pay based on the amount of content that they are developing. More content means more spending.  ‍
3. Commission costs: Those influencers that you have promoting your products may make a commission every time someone purchases through a referral link. The better they do, the more money they earn and the more you have to pay.

Fixed costs  

Additionally, there are several fixed costs that many people forget to factor into the equation, including:

1. Salaries: If you want to execute your marketing tactics, you’ve got to pay your marketing team to do the work.   ‍
2. Tech stack: Most marketing teams rely on a suite of tech tools to house and analyze their data. Many of these tools will cost a flat fee to onboard.  ‍
3. Long-term contracts: You may be able to turn a variable cost into a fixed cost if you lock in a consistent monthly or annual fee for services like content creation or creative support.  

Choosing scope: Campaign-level ROI vs overall marketing ROI

With all of these costs and factors to consider, how do you go about determining what to include in marketing ROI calculations?  

Michael Brenner, the CEO of Marketing Insider Group, and coauthor of The Content Formula, offers some advice. He says that it’s important to think about scope: Are you trying to more broadly determine the ROI of all your marketing efforts or is there a more specific campaign or tactic that you want to assess?  

“When the scope is broad, such as Overall Marketing ROI, you should include all ‘variable costs’ such as media spend and agency costs, as well as ‘fixed costs’ such as salaries plus benefits and technology investments,” he says. “Once you get down to a smaller scope, such as the campaign ROI level, I recommend taking the simple approach.”

Simple ROI refers to those more straightforward ROI calculations, which can be useful so long as you apply that approach consistently. You don’t necessarily need to slice and dice revenue and apply it to different tactics. But you may still want to consider factors like variable investments of increased creative, content, media, and agency expenses, as these aren’t particularly difficult to add into the calculations.

And Brenner has one other piece of advice to make the process easier: “The best way to determine what to include in ROI calculations is to talk to your finance and accounting colleagues.”

Aligning with finance and leadership

As Brenner suggests, leaning on finance teams can be helpful when trying to determine the right marketing ROI metrics and calculations that make sense for your team. While finance may rely on similar data and analysis that marketers use, it is ultimately a different discipline that even the most mathematically savvy marketers may not have a full grasp of.  

“They can help with complicated formulas such as NPV (Net Present Value) and IRR (Internal Rate of Return) when considering investments in various marketing activities,” he explained. “The variables they use should also be included in analyzing ROI after a campaign has run.”

What are NPV and IRR? Both calculations allow companies to determine whether a project is worth investing in and whether it will be profitable. But the point is you’ll hardly be the first marketer to not fully understand how to use these calculations, and that’s why your finance team is there.  

So, partner with the finance pros in your organization to validate the metrics that you choose to collect and include in your ROI formulas. And use their expertise to understand how best to communicate ROI to the higher-level executives in terms that they will believe. They are experienced in picking out the data points that are most relevant to the people at the top and know how to tell a story with financial data that will allow you to prove marketing ROI.  

How marketing leaders prove ROI using Domo

There are plenty of marketing tools that make big promises, but don’t turn out to be worth the investment. Domo isn’t one of them.  

With Domo, you can prove marketing's bottom-line impact on the business. Drawing on more than 1,000 API connectors, you can bring together your marketing, sales, finance, and all of the other data across the organization into one platform and create a unified set of metrics to measure ROI of your marketing projects.  

Build dashboards that collect both revenue and spend data for specific channels and campaigns and quickly spot patterns and trends that allow informed decision-making about which tactics to pump money into and which to cut. With Domo, you can make faster pivots when campaigns underperform or market conditions change. And you can more effectively share your success with leaders and answer their questions through easy-to-understand visualizations.

But don’t just take our word for it. Hear what some of our customers have to say:

“When data was harder to access, people made decisions based on whatever information they had, using gut instinct to fill in the gaps. With Domo, we now expect people to have hard data to back up whatever decision is being made.”—David Damitz, global business intelligence team lead at TaylorMade Golf, a lead manufacturer of golf industry products

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“The best thing about Domo is that I can see everything in one place. It saves me so much time because I can see the performance of campaigns across Facebook, Pinterest, Instagram, Snapchat, and Tik Tok all next to each other, and see how each works together.”—Katie Russell, digital marketing coordinator at Cozy Earth, a luxury lifestyle retailer

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“With the insights we get in Domo, we can move money to the channels where we see our campaigns are working best. It also helps us plan what type of content we should build for the future.”—Emily Do, global social media manager at Zippo, manufacturer of the popular reusable, windproof metal lighters

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And we wouldn’t try to sell you something that the staff at our organization wasn’t also using. Learn more about how the teams at Domo rely on the platform to track campaign ROI.  

Elevate your marketing strategy with Domo

Marketing ROI doesn’t need to be complicated, but it does need to be consistent, credible, and aligned with finance. Domo gives you the tools you need to turn these crucial calculations into a simple task.  

Are you ready to start making better decisions about your marketing investments? Explore Domo for Marketing and try Domo for free. It’s the easiest cost-benefit analysis you’ll have to perform today.