ROI (Return on Investment)
ROI stands for Return on Investment. It’s a metric used to evaluate the effectiveness and profitability of an investment – in this case, mobile user acquisition (UA). ROI clearly explains the financial return from money invested in advertising campaigns.
The formula to calculate ROI is:
ROI = (Revenue from Ads – Cost of Ads) X100 \ Cost of Ads
- Revenue from Ads is the total income generated from the digital advertising campaign. This may include sales, leads (to which a value has been assigned), or any other valuable conversion metric.
- Cost of Ads refers to the total amount spent on the campaign, including media spend, creative production fees, and other expenses related to the campaign, like image rights.
ROI is an important KPI as it helps make informed decisions regarding budget allocation and ad spend. A positive ROI means a campaign is effective – it’s generated more revenue than its cost. A negative ROI indicates a campaign has cost more than it’s earned.
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