Return on marketing investment

marketing ROIROI
Return on marketing investment (ROMI) is the contribution to profit attributable to marketing (net of marketing spending), divided by the marketing 'invested' or risked.wikipedia
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Rex Briggs

In the book "What Sticks: Why Advertising Fails And How To Guarantee Yours Succeeds," Rex Briggs suggested the term "ROMO" for Return-On-Marketing-Objective, to reflect the idea that marketing campaigns may have a range of objectives, where the return is not immediate sales or profits.
Rex Briggs (born 1971) is an author, award winning marketing ROI researcher.

Return on investment

ROIreturnreturns
ROMI is not like the other 'return-on-investment' (ROI) metrics because marketing is not the same kind of investment.

Churn rate

churnattrition rateattrition rates
Long term ROMI models will often draw on Customer lifetime value models to demonstrate the long term value of incremental customer acquisition or reduced churn rate.
Churn rate is an input into customer lifetime value modeling, and can be part of a simulator used to measure return on marketing investment using marketing mix modeling.

Brand equity

brand valuebrandbrand denomination
Brand valuation is distinguished from brand equity by placing a money value on a brand, and in this way a ROMI can be calculated.
This is directly related to marketing ROI.

Marketing mix modeling

Marketing-mix modelingmarketing-mix modelsMedia Mix Modeling
The most common short term approach to measuring ROMI is by applying Marketing Mix Modeling techniques to separate out the incremental sales effects of marketing investment.
True 'Return on Marketing Investment' is a sum of short-term and long-term ROI.

Marketing effectiveness

It is also related to marketing ROI and return on marketing investment (ROMI).

Demand chain

Demand-driven supply network
Return on marketing investment models can help demonstrate where financial impact of demand driving activities is positive and negative, and so help support fact-based budgeting.

Profit (accounting)

profitprofitsprofitability
Return on marketing investment (ROMI) is the contribution to profit attributable to marketing (net of marketing spending), divided by the marketing 'invested' or risked.

Marketing spending

Return on marketing investment (ROMI) is the contribution to profit attributable to marketing (net of marketing spending), divided by the marketing 'invested' or risked.

Performance indicator

key performance indicatorkey performance indicatorsmetrics
ROMI is not like the other 'return-on-investment' (ROI) metrics because marketing is not the same kind of investment.

Investment

Investmentsinvestingcapital investment
ROMI is not like the other 'return-on-investment' (ROI) metrics because marketing is not the same kind of investment.

Capital expenditure

capital expendituresCAPEXcapital expense
Instead of money that is 'tied' up in plants and inventories (often considered capital expenditure or CAPEX), marketing funds are typically 'risked'.

Operating expense

operating expensesOperational expenditureOPEX
Marketing spending is typically expensed in the current period (operational expenditure or OPEX).

Sales

salesmansaleseller
The idea of measuring the market's response in terms of sales and profits is not new, but terms such as marketing ROI and ROMI are used more frequently now than in past periods.

Marketing

marketermarketedmarketing campaign
In the book "What Sticks: Why Advertising Fails And How To Guarantee Yours Succeeds," Rex Briggs suggested the term "ROMO" for Return-On-Marketing-Objective, to reflect the idea that marketing campaigns may have a range of objectives, where the return is not immediate sales or profits. Return on marketing investment (ROMI) is the contribution to profit attributable to marketing (net of marketing spending), divided by the marketing 'invested' or risked.

Brand

brand namemarquebrands
For example, a marketing campaign may aim to change the perception of a brand.

Metric (mathematics)

metricdistance functionmetrics
There are two forms of the Return on Marketing Investment (ROMI) metric.

Revenue

turnoverrevenuesgross revenue
The first, short-term ROMI, is also used as a simple index measuring the dollars of revenue (or market share, contribution margin or other desired outputs) for every dollar of marketing spent.

Market share

sharemarketmarket-share
The first, short-term ROMI, is also used as a simple index measuring the dollars of revenue (or market share, contribution margin or other desired outputs) for every dollar of marketing spent.

Contribution margin

contributionmarginsUnit Contribution Margin
The first, short-term ROMI, is also used as a simple index measuring the dollars of revenue (or market share, contribution margin or other desired outputs) for every dollar of marketing spent.

Brand awareness

brand recognitionhousehold nameawareness
For example, ROMI could be used to determine the incremental value of marketing as it pertains to increased brand awareness, consideration or purchase intent.

Cash flow

cash flowscashflowcash-flow
This is a sophisticated metric that balances marketing and business analytics and is used increasingly by many of the world's leading organizations (Hewlett-Packard and Procter & Gamble to name two) to measure the economic (that is, cash-flow derived) benefits created by marketing investments.

Customer lifetime value

lifetime valueCustomer Lifetime Value (CLV)customer's lifetime value
Long term ROMI models will often draw on Customer lifetime value models to demonstrate the long term value of incremental customer acquisition or reduced churn rate.

Brand valuation

brand valueroyalty relief method
Long term ROMI models have sometimes used brand valuation techniques to measure how building a brand with marketing spend can create balance sheet value for brands (or at least for brands that have been transacted, and therefore under accounting rules can have a balance sheet value).

ISO 10668

The ISO 10668 standard sets out the appropriate process of valuing brands and sets out six key requirements, transparency, validity, reliability, sufficiency, objectivity and financial, behavioural and legal parameters.