Meeting investment goals are dependent on a variety of factors. First off, Marketing Return on Investment or ROI is determining the earned profit from each marketing campaign investment. The basic Return on Investment formula is subtracting investment from the return, divide the total with the investment. However, when we talk about marketing return on investment, several variables can be added thus making it complex but more reliable. Variables are added either on the investment side or the profit side and can be customized depending on the business. The perfect marketing ROI calculator incorporates the necessary variables customized to the particular business’ specific marketing campaigns.
Marketing ROI calculator is important in marketing management. For long-term goals, the total number of years that is to be analyzed must be included in the formula to determine the rate of return. This is compounded annually. Some investments may be gaining in the beginning, but in a bigger picture, they may be losing overtime. For long-term investments, it is not only the initial investment that needs to be taken into account but reinvestments of dividends as well. Every year, the business still needs to contribute annual investments, typically affected by the inflation rate. Annual investments increase as inflation rate increases. Tax rate should also be included, it is the portion of your profit that needs to be set aside for taxes, presumably paid annually. But it is not all bad news, investments are also subject to compound interest, compounded interest return or simple interest return. Additional variables like possible inflation and taxes also need to be included to make the analysis more credible.
ROI calculations for projections of long-term goals are hypothetical. It can only predict close to the actual return on investment, but the exact return of investment in certainty. Investments that projects higher returns is naturally more volatile and subject to higher risk. Long-term investments are also dependent on time and potential loss of initial capital is to be expected if not handled properly. There are many informative and interactive calculators made available online as self-help tools. But these are only for independent use only and must be used with caution, your business shall not depend on it but only aid in making informed decisions. It does not provide a sure-fire way investment advice.