Glossary/ROI
What is ROI?
Short answer
ROI, or return on investment, is the return on what you put in: the profit from a campaign set against its cost, given as a percentage or as a multiple. It answers the question of whether the money spent on a collaboration came back, and with what surplus. It is not the same as revenue, because you only count it once all costs are deducted.
How is the ROI of a campaign calculated?
You subtract the full cost of the campaign from the revenue attributed to it, and set the difference back against that cost. The whole difficulty sits in both parts. On the cost side it is easy to forget the product sent to the creator, the editing, the ad budget and the hours of your own team. On the revenue side — the margin, the returns and the orders that would have happened anyway.
How is ROI different from revenue?
Revenue is the money that came in. ROI tells you how much of it is left after the cost of the campaign and whether it was worth running at all. A collaboration can bring high revenue and a negative return if the margin is low and production cost more than planned. That is why a campaign summary is worth showing both numbers side by side.
Why calculate the ROI of working with creators?
Because without it the decision on the next budget rests on the impression that it was loud. A calculated return lets you set work with a creator against other channels and decide which part to repeat. It has to be read honestly, though: the effect of a brand campaign does not fit into this metric, because brand recognition pays off long after the books are closed.
Where to order it or find tasks
Related terms
Words that come up in the same conversations. Each has its own definition in the glossary.
- Conversion
- The action the brand launched the campaign for: a purchase, a booking, a sign-up. That, and not the number of views, tells you whether the collaboration paid off. Read more
- Campaign budget
- The money set aside for the whole activation: creators' fees, production and any promotion of the materials. Splitting those three parts up front makes the results easier to judge. Read more
- Reach
- The number of people who saw the material. It does not say how many of them reacted or bought — which is why it is read together with engagement, not instead of it. Read more
- Views
- The number of times the material was played, repeats by the same people included. Always higher than reach, which is why it is easy to mistake for the number of viewers. Read more
Frequently asked questions
How is ROI different from ROAS?
ROAS sets the revenue from a campaign against the spend on it and leaves out production costs and margin. ROI counts profit, so it is stricter and works better for a conversation about whether the whole collaboration paid off.
Can you calculate ROI for a brand campaign?
Partly. You can add up the costs and the attributed orders, but the growth in brand recognition will not fit into this metric. With goals like that it is worth reporting reach and brand searches alongside ROI.
Which costs should you include in the ROI of a collaboration?
All of them on the brand's side: the creator's fee, the value of the product sent, the shipping, the budget for promoting the content and your own team's time. Leaving any of them out inflates the result and ruins the comparison between campaigns.
