Valitics. Web Strategies, Net Results

As a business owner, every penny you spend comes out of your paycheck.  This can make spending money on technology difficult and the return better be worth the expenditure.  A small scale example of this was my decision to purchase an iPhone.   

ROI
Most businesses find it difficult to know exactly what their ad budgets bring in sales. Online advertising makes it easy, or at least much less painful, to know your Return on Investment with precision. Not setting up this reporting is almost unthinkable unless you like to throw money away. We’ll get into how to use this data at the end of this post.

ROI Basics
The formula for caclulating ROI is: ROI = [(Revenue - Investment)/Investment] x 100 For example, you spend $5,000 on advertising and it generates $20,000 in sales. Your ROI is: ROI = [($20,000 - $5,000)/$5,000] x 100 ROI = 300% One important note is that 300% ROI may be good or bad depending on your profit margins. In this example, if your total cost to sell $20,000 of goods was $17,000 and you spent $5,000 on ads, you’re in the red. To prove your ads are good for business, just rerun the above formula using Profit rather than Revenue.