Calculate ROI on advertising spend. Measure campaign performance. This tool helps you calculate, understand, and optimize this metric for your business.
The number that matters is the break-even figure: at a 30% margin you need 3.33x revenue per shilling of spend just to cover the campaign. Anything below that loses money however good the revenue looks. Most advertising judged a success on revenue alone fails this test, because margin is never applied.
Advertising judged on revenue alone almost always looks successful, because revenue ignores what the goods cost. The test is whether gross profit on the attributed revenue exceeds the spend.
The break-even return on ad spend follows from your margin: at a 30% margin you need 3.33 shillings of revenue per shilling spent just to stand still. At a 20% margin you need 5. Most campaigns that get repeated have never been measured against that line.
The figure this calculation is most sensitive to is the revenue you attribute to the campaign, and it is the one hardest to get right. Be conservative: count what you can trace, not what coincided.
A simple honest method for a small shop is to compare the same weekday in the weeks before and during, and attribute only the difference.
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