Advertising

How to get started

Create a LinkedIn Page

First, build your company's brand and build trust with your community.

Campaign Manager

Second, create your first ad campaign on LinkedIn's ad platform.

Sign in to Campaign Manager

Ad formats

Sponsored Content

Reach and engage a professional audience in the LinkedIn feed.

Sponsored Messaging

Engage your prospects where professional conversations happen.

Dynamic Ads

Engage prospects with ads automatically personalized to them.

Text Ads

Self-service ad formats to create campaigns in minutes.

See all Ad formats

Learn More

Pricing

Discover how much it costs to advertise on LinkedIn.

Targeting

Reach the people who matter most to your business.

Lead Generation

Qualified leads come from a quality audience on LinkedIn.

Boosting

An easy way to reach new audiences by amplifying your best content.

Conversion Tracking

Measure the true impact of your LinkedIn ads.

Reporting & Analytics

Measure the ROI of your LinkedIn ads.

Objective Based Advertising

Choose your LinkedIn ad format based on your objective and customer journey.

Ad Tips & Best Practices

Why LinkedIn

LinkedIn Pages

Resources

Sign in

Create ad

Return on Investment

Advertise on LinkedIn

Marketers spend a lot of time and money developing strategies to grow their businesses. But how do they know if their efforts are worth the investment, and how do they set a baseline for success?

Measuring the return on investment (ROI) of a marketing strategy is crucial to justifying budgets and planning for profitability. This guide will define ROI, why marketers need to use it to validate their efforts, and how to calculate the ROI of marketing strategies

What is Return on Investment (ROI)?

Return on investment (ROI) evaluates a business's net income or profit in relation to its marketing strategy investment. Marketers also refer to this form of ROI as marketing ROI (MROI). It helps them justify budgets and investments by measuring the overall success of a marketing campaign strategy, rather than solely focusing on advertising spend for specific media buys or channels.

 

Icon of a question mark.
Illustration of an individual standing and working on their computer surrounding by money and graphs.

Why is ROI Important for Marketing?

Marketers can calculate profitability baselines by using a basic ROI equation. This enables them to compare the effectiveness of future campaign strategies against past successes.

Icon of a hand and a puzzle piece.

Key Marketing ROI Benefits

Marketers can use their baseline MROI calculations to:

 

 

  • Determine whether to increase or decrease their budgets to maximize future sales growth.

 

  • Reallocate budgets from strategies that didn't achieve desired results to more ROI-positive marketing strategies.

 

  • Assess the effectiveness of current marketing strategies and identify areas for improvement in order to optimize future campaigns.

 

Using ROI to make data-driven decisions, marketers can more effectively distribute resources and optimize their strategies to drive long-term success.

Risks of Ignoring ROI Analysis

Not having a model to calculate ROI and measure success can result in wasted time and money spent on unprofitable marketing strategies.

 

Ignoring ROI affects all business units that could benefit from investing time, resources, and finances into profitable ventures. Without taking certain factors like the ROI of a specific marketing campaign or channel, or of an employee’s time and resources into account, businesses can end up with:

 

 

  • Inaccurate sales projections: Causing them to fall short on earnings if some portion of the sale isn't allocated toward essential parts of the business – making the ROI not as high as it seems

 

  • Future cash flow problems: Resulting in the need to make unexpected employee headcount or budget cuts because of lost resources or overspending

 

  • Miscalculated unit economics: Impacting their break-even point and gross margin forecasts which also impact their cash flow and overall financial planning

Different types of ROI

There are a variety of ways to measure ROI. However, we will stick with the most common types marketers might use.

Icon of a pie chart with two highlighted segments.

Financial ROI

Financial ROI involves net profitability and outcomes of investments like marketing technology to boost campaign success over a set period.

Illustration of two individuals, one standing while the other is sitting, having a conversation.

Strategic ROI

Strategic ROI measures a specific strategy's net profitability, such as a seasonal marketing campaign to generate sales leads over a set period.

Illustration of three individuals standing and having a conversation.

How to Calculate ROI

Marketers can use a simple ROI formula for calculation. However, they must first gather all of the information about the investment, including all of the investment costs and their sales results, before completing the calculation.

Icon of a calculator.
Illustration of an individual standing next to a clipboard and calculator.

ROI Formula for Marketers

 

Calculating ROI requires businesses to divide the net amount they earned in profit from a financial or strategic investment by the total investment amount. Next, they’d multiply that number by 100.

ROI = Net profit / total investment amount x 100

To be clear, net profit = The total sales earned minus

the total amount invested.

 

Let’s say a business launches a holiday marketing strategy and invests its $200,000 budget on everything from graphic and web design to copywriters, media planning and buying with an ad agency, printing and shipping of direct mail pieces, and email deployment.

The company then earns $900,000 in sales from the holiday campaign.

 

The strategic ROI calculation would be:

Net profit ($900,000 - $200,000) / $200,000 X 100 = 350%

The ROI is, therefore, 350%. That number indicates that the campaign delivered a significant ROI and can now be used as a benchmark for future holiday marketing strategies.

Illustration of an individual standing next to a clipboard and calculator.

ROI Variables and Limitations to Consider

Time is one of the most significant limitations to measuring marketing return on investment, or MROI. While a B2B lead generation campaign may only last a month or two, the average sales cycle lasts about six months.

Many campaign strategies, such as content creation, branding, customer advocacy, and social media, can continue to drive leads and sales for many months – and even years – after a completed campaign.

When that extra time is not factored into the calculation, it may significantly impact the perception and reality of a marketing strategy or campaign’s success.

We recommend that businesses take a more long-term approach to calculating ROI, focusing on the complete length of a marketing campaign rather than looking at outcomes too early.

Additionally, remember that metrics such as cost-per-click and click-through rates only show one small piece of the puzzle. Not everyone who fills out a lead gen form on a website or a landing page will do so via an online ad, for example.

Illustration of two individuals standing and having a conversation.
Illustration of documents and a magnifying glass.

 

 

 For more information about overcoming the challenges associated with calculating the marketing return on investment (ROI).

Dowload our full report

Digital Tools to Help Measure and Calculate ROI

There are some digital tools businesses can use to gather all of the data necessary to measure and calculate their overall ROI of a marketing strategy.

B2B marketers can use reporting and analytics tools, along with conversion tracking data, to analyze performance over time and measure online ad success post-campaign.

Illustration of an individual sitting on a stool and working on their laptop.

 

Back to Top

 

How to Increase ROI for Marketing

Once marketers understand how to measure ROI, they can use key insights to boost it using the following strategies:

Icon of a graph.

1. Frequent Testing and Experimentation

Marketers can test and experiment with different sales channels to find those that drive the highest ROI for their business. LinkedIn’s campaign reporting and conversion tracking tools mentioned above can help with the experimentation process.

Additionally, marketers can use A/B testing to increase the ROI of their campaigns by optimizing copy and creative on landing pages, and in their emails and ad units.

 

  • Inaccurate sales projections: Causing them to fall short on earnings if some portion of the sale isn't allocated toward essential parts of the business – making the ROI not as high as it seems
  • Future cash flow problems: Resulting in the need to make unexpected employee headcount or budget cuts because of lost resources or overspending
  • Miscalculated unit economics: Impacting their break-even point and gross margin forecasts which also impact their cash flow and overall financial planning

 

Illustration of two individuals sitting together at a table and having a conversation.

2. Focus on Web Analytics and Core Metrics

Using a web analytics tool with a campaign management tool, marketers can choose key objectives (e.g., generating leads and conversions) for each channel and track core metrics, like conversion rates and cost-per-conversion, to optimize campaign results and ROI over time.

Illustration of an individual at their desk and working on their laptop.

3. Track Spending Over Time

Keeping a close eye on marketing and ad expenditures over time will also help businesses identify where and when they might be able to adjust budgets to boost overall ROI.

LinkedIn Ads reporting and conversion tracking reports can help to identify budget areas that could either be optimized or adjusted for future success.

Illustration of two individuals, one standing while the other is sitting, looking at the same computer monitor.

4. Conduct Customer Research

Gaining a deeper understanding of customer personas through customer research, and conducting a SWOT analysis of competitive marketing strategies will enable businesses to better plan and adjust their own strategies and budgets to boost ROI in the future.

Illustration of two individuals sitting together at a table and having a conversation.

Calculating ROI Helps Marketers Maximize Their Budgets

Businesses should calculate their return on investment using the formula provided to justify and maximize marketing budgets and financial investments.

Other ways of calculating MROI include MER (Marketing Efficiency Ratio) and CAC (Cost per Customer Acquisition). However, these equations can get quite granular, depending on the business goals, and look specifically at how marketers spend budgets. It’s best to keep it simple when starting out.

Try taking a long-term approach when evaluating the success of financial and strategic marketing investments. Additionally, rather than worry about what is a good return on investment, focus on whether the ROI achieves the marketing team’s long-term goals or desired metrics to grow their business successfully.

Discover the foundational tools needed for a successful campaign with LinkedIn Ads. Or, download the LinkedIn ROI Research Report for help with long-term marketing planning and success.

Icon of a money bag.
Illustration of an individual sitting on the floor and working on their laptop.

 

Back to Top

 

Have questions?

Talk to a specialist now

Learn more about LinkedIn Ads

Get support