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One reason the return metric ROI (return on investment) is so popular is because of its simplicity. The formula for ROI, regardless of the industry, is always the amount you profit (or expect to profit) from an investment over the initial cost of the investment. For television advertising, this means figuring out how much you profited from a television ad campaign. The two things you need to determine are the income made from the investment and the cost per order of the investment.
Calculating the returns of a specific advertising campaign can be critical to understanding the value and success driven by the advertising effort. By defining the returns generated by a campaign, business leaders know if a campaign costs are justified and if it is worth repeating. Unfortunately, accurately calculating advertising returns can be detailed and complex. However, a simplified process to calculate advertising returns is outlined below. Following these steps will provide a starting point for your evaluative effort.
