ROI Math Formula for Ratios?

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joey_skulls

Joined: Sep 15, 2006

# Posts: 133

Posted: 09/20/2006 11:05 am

Hi guys,

I have a little memory issue this today, I was wondering if you guys can help out.
I lost my excel spreadsheet that calculates it for me (dumbass me, I rely on computers too much, I cant calculate anymore).

I'm currently running an advertising campaign and I need to find out it's ROI Ratio so far. We are aiming for a 1:3 ROI ratio.

The campaign cost so far $902.75 and it brang us $400.
What would be the math formula to calculate the ROI ratio (1:?)

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excell

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Joined: Mar 19, 2001

# Posts: 14495

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Posted: 09/20/2006 11:15 am

Approx less than 50% loss _ runs! smile

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flyingrose

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Joined: Oct 30, 2003

# Posts: 3361

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Posted: 09/21/2006 02:28 pm

This doesn't really answer your question but may be helpful. Hopefully someone else will post the actual equations for manual calculations.

In your example you have a substantial negative ROI which you will want to correct. There is a delay between ad start and most sales; however, you don't want to be spending far more on advertising than you're selling.

There are quite a few online ROI calculators. If anyone has one they particularly like perhaps they'll let us know. In the meantime, here are a few to check out:

Yahoo ROI CPC calculator

Volusion PPC ROI calculator

Stepmiles PPC ROI calculator

Globi projected PPC profit traffic per keyword based on Overture search tool traffic

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OAC

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Joined: Jan 25, 2001

# Posts: 6751

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Posted: 09/22/2006 05:11 pm

I assume when you say it brought you $400, it brought you $400 of gross profit, because it is gross profit that you should be measuring the advertising campaign cost against.

In which case the ratio would be 1:1/(400/903) = 1:1/(0.44:1.00) = 1:1/0.44 = 1:2.26 i.e. every $1.00 of gross profit cost $2.26 to generate.

Unless you get a lot of repeat sales from these new customers, this campaign is a recipe for going broke. On the other hand, if you do get a lot of repeat sales, then this campaign could be quite a profitable investment.

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joey_skulls

Joined: Sep 15, 2006

# Posts: 133

Posted: 09/25/2006 07:01 am

Hmm I see.

The $400 are from 9 sales which are likely to become repeat customers. And yes it is gross profit.

So as far as ratio goes for sales; i have a 1:44 ratio

So if it costs me $2.66 for every dollar of profit, this a recipee for disaster like you said.

Minimum buy at my site is $25. How does this come into play/calculations?

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