ROI: ROI is an acronym that stands for "Return on Investment." In business, ROI is essentially a measure of how much return a company has received from its marketing efforts.
For the most part, measuring ROI is a fairly basic process. For every dollar that a company spends on marketing or some other improvement, they will hope to see the same amount or greater in profit. For instance, if a firm spends $1,000 on SEO, they would hope to see more than $1,000 in profit as a result of that expenditure.
The calculation for ROI is fairly simple: Return on Investment (%) = (Net profit / Investment) × 100. A profit of $10,000 divided by an investment of $5,000 would equal 2 and then by multiplied by 100. Therefore, this investment would produce a 200% return.
In addition to or in place of measuring ROI, some companies may also prefer to use a more complex profit elasticity measurement. These calculations look at various economic conditions in order to form a prediction, such as adjusting price, supply and demand, and other variables.