Instead of money that is 'tied' up in plants and inventories (often considered capital expenditure or CAPEX), marketing funds are typically 'risked'.
[3] 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.
[4] A necessary step in calculating ROMI is the measurement and eventual estimation of the incremental sales attributed to marketing.
For example, if a company spends $100,000 on a direct mail piece and it delivers $500,000 in incremental revenue, then the ROMI factor is 5.0.
Every dollar expended in direct mail advertising translates to an additional $2 on the company's bottom line.
For example, ROMI could be used to determine the incremental value of marketing as it pertains to increased brand awareness, consideration or purchase intent.
For many other organizations, this method offers a way to prioritize investments and allocate marketing and other resources on a formalized basis.
Long-term ROMI, however, is a sophisticated measure used by a number of firms interested in getting to the bottom of value for money challenges often posed by competing brand managers.
There is usually no tangible asset and often not even a predictable (quantifiable) result to show for the spending, but marketers still want to emphasize that their activities contribute to financial health.
Based from statistical research, and all things being equal, the business owner can calculate their current Digital Marketing ROI via their website and web analytics software to understand their : Add in readily available information on potential traffic from the Google Keyword Tool, and surveyed costs to acquire that traffic, the business owner or marketer can estimate the potential ROI if that traffic is acquired, and even measure it against other marketing methods.