RAM, a world leading media research company with one of the largest reference databases in communications, launches a simplified calculator that makes it possible to analyse both the break-even point and the financial performance of an ad campaign.
ROMI (Return on Marketing Investment) is perhaps a somewhat controversial term but for product advertising it is both credible and commercially relevant. With the help of data from RAM’s advertising measurements the ROMI calculation gives the opportunity to both discuss and simulate the reasonable and possible outcome of the campaign.
“In the past it has been difficult to understand, analyse and calculate the economic effects of advertising campaigns. We have changed this by providing a tool for ad sales reps and advertisers to work together in order to understand the real impact that advertising plays in increasing advertiser sales,” says RAM’s head of research Staffan Hultén.
Advertising that focuses on brand building has the objective of providing a long-term effect and should be measured with the aim of understanding how the brand develops over time. True product advertising however, is used to provide short-term economic effects. RAM’ s ROMI-calculator is designed just for this purpose.
The starting point for the calculation is RAM’s advertising effectiveness measurement results. The question concerning buying intentions shows the number of potential customers that the campaign generated – however the figure is often overrated, to varying degrees. Two additional bits of information need to be given to help calculate the true ROMI; the campaign cost and profit/contribution per customer.
The tool automatically calculates the potential total profit. In this example it is 847 600 SEK. 6880 people each contributing SEK 145 in profit / margin per person minus the campaign investment of SEK 150 000. The estimate also suggests that if only 15%, or 1030 people, out of a possible 6880 have answered truthfully, the campaign reached break-even.
For more information contact:
Staffan Hultén, CAO RAM Group
Telephone: +46 (0)703 249193