Marketing ROI MROI, ROMI; contrast with MER (Marketing Efficiency Ratio) and ROAS
The profit marketing generated per dollar spent, after the cost of the goods sold to those customers.
The fork, why two teams get different numbers
ROAS and ROI are constantly swapped, and they answer different questions.
ROAS is REVENUE / spend (gross, no margin, ratio ≥ 0). Marketing ROI nets
out cost: it is (gross profit from marketing-driven sales − marketing cost)
/ marketing cost, expressed as a percentage that can be negative. MER
(Marketing Efficiency Ratio) is a third thing, total revenue / total
marketing spend, deliberately blended and attribution-free. CMOs quoting
"our ROI is 4" almost always mean ROAS; the CFO computing ROI on the same
campaign gets 0.9x because margin and fully-loaded cost are in. Same
campaign, three defensible numbers.
The trap
ROI on an INCREMENTAL basis and on an ATTRIBUTED basis diverge hugely.
- The full trap, worked on a real export
- Every formula variant, spelled out
- The reconciliation anchor, what to tie it to and when to refuse
Reference: GAAP/ASC (gross margin composition · reference) · management-accounting convention