Veltos.Tech

Business and process

ROI

Also known as: return on investment, ROMI, payback on investment

Definition

ROI is the return on investment metric: the difference between income and cost divided by cost, expressed as a percentage, with the marketing variant ROMI counting only the advertising budget on the cost side.

The formula is simple but everything depends on what goes into it. Income can mean revenue or gross profit, and in a business running a 20% margin the gap between those two calculations is nearly fivefold. A correct marketing payback calculation uses margin: spend 100,000 RUB on advertising, close 500,000 RUB of deals at a 30% margin, meaning 150,000 RUB of profit, and ROMI is 50%. The same case computed on revenue would read 400% and create the impression of a brilliant campaign that in fact returned one and a half times its cost.

The second source of distortion is period and attribution. In B2B a deal can close three to six months after the first touch, so ROI computed over one month will show a loss on long-cycle channels and a profit on branded queries that merely harvest demand somebody else warmed up. Hence the practical rules: measure over a period no shorter than the sales cycle, separate new customers from returning ones, and account at least roughly for the first touch instead of crediting everything to the last click. Without end-to-end analytics this calculation rests on assumptions, and that is worth stating plainly.

A separate case is ROI on development, calculated less often than it should be. A website, an app or an automation rarely generates revenue directly, so the effect is computed through staff hours saved, error rates reduced, conversion lifted on existing traffic, or a paid service no longer needed. The calculation is imprecise, but it is what turns "we need a new website" into a testable claim: a quarter-point conversion gain on current traffic pays the project back in so many months. Even a rough model beats having none.

Related terms

Related services

Read more

Need this done, not just defined?

We do this work, not only write about it. Describe the task and we will scope it and send a staged estimate.