What is ROI – Return on Investment?

What is ROI - return on investment

So many people ask me why I market businesses via Facebook Ads – and my answer is easy – proven and measured ROI.

So what is ROI?

ROI stands for Return on investment

A ratio metric used to measure the probability of gaining a return from an investment. You can compare the gain or loss from an investment relative to its cost.  Although ROI is a ratio, it is expressed as a percentage rather than as a ratio.

In previous posts I noted that building your brand identity can give you a 225% ROI.  This means that the time and money taken to create your brand can  bring in around 2.25 times that investment.  So say you spend $100 on building your brand (that includes your time costs) you will earn, on average, about $225 on that investment.

Now, using Facebook ads that ROI is usually averaged at 400%.  This means that if you spend a dollar advertising on Facebook you will earn around $4.  Some people have seen the effectiveness of Facebook ads bring in ten or more times that amount.

Now as stated earlier, the ROI on Facebook, unlike other avenues of advertising, can be proven and measured, which is very important to someone like myself who likes to see facts and figures.

So how can you measure ROI?

When you advertise in the newspaper or radio there is no way to prove that anyone has read your advert unless you survey them when they purchase.  With Facebooks reporting tools you can record:

  1. how many people see your ad,
  2. if they read the whole advert, and
  3. who chose to move on to find out more by clicking in to the advert to be taken to the landing page, website or event.


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