What is ROI (Return on Investment)?
ROI, or return on investment, is a metric you use to measure how much value an investment delivers relative to the capital you've put into it. You get the result as a percentage that shows the relationship between profit and cost. In other words, ROI tells you how effective your investment is — both when you assess an overall initiative and when you analyse individual parts of it.
You calculate ROI by subtracting the costs from the gain and then dividing by the costs. Finally, you multiply the result by 100 to get a percentage. ROI therefore expresses directly how much of your budget actually turns into gain. In marketing, you often use ROI to measure the impact of, for example, a Google Ads campaign, an SEO initiative or a video format on social media. ROI thus becomes part of the strategic process in which you assess performance across channels and adjust your efforts to increase profitability.
How do you use ROI?
You use ROI as a management tool to compare results across investments. When you work with digital marketing, you can use ROI to see, for example, whether you get the most value out of your budget by investing in paid social, search advertising or organic content. By setting clear goals and measuring the impact afterwards, you can identify which channels generate the most return per krone, and which need adjusting.
ROI is therefore not just about reporting results, but about optimising future decisions. For example, you can use ROI as a basis for decisions in strategy development, where you prioritise activities based on the impact they create for the business. If you also link your ROI calculations to user data and customer journey insights from SEO or social media, you get a more nuanced picture of what drives the return — and why.
Why is ROI important?
ROI is important because it gives you a common language for measuring results across departments and types of investment. When you can express the impact of an initiative as a percentage, you make it easier to compare efforts, whether you're measuring an advertising budget, a new web platform or a rebrand. It also makes it possible to document the impact of marketing activities to management or clients, as you turn creative decisions into numbers that can be used in budget discussions.
A high ROI means your effort generates more value than it costs. That sounds simple, but it's precisely the simplicity that makes ROI useful in practice. You can quickly see whether a project is performing — or whether you need to rethink your strategy. Conversely, a negative ROI shows that the project isn't delivering a sufficient return, and that you should analyse the reasons. In marketing, it might be that a campaign didn't reach the target audience, or that the ads were shown on channels with too low a conversion rate.
What types and variants are there?
There are several ways to measure ROI, depending on the context. Marketing ROI (MROI) looks exclusively at marketing activities and relates the gain from, for example, campaigns or content production to their costs. This lets you isolate the value of different efforts and choose the ones that deliver the greatest return. Another variant, Return on Costs (ROC), instead measures the return directly against costs and is typically used in broader business contexts. If you dig deeper, you can also analyse ROI through related metrics such as Return on Assets (ROA), which shows how efficiently the company uses its assets.
In practice, you choose the variant depending on whether you want to measure the results of individual campaigns, an overall channel strategy or the company's investment policy. In marketing, MROI typically makes the most sense, because it isolates the part of the profit you can attribute to marketing.
How do you work with ROI in practice?
When you work with ROI in practice, much of it comes down to defining what you're measuring from the start. You need to know both the cost of the investment and the value of the gain. This applies especially in digital marketing, where you often draw on data from several sources — e.g. ad platforms, web analytics and CRM systems. If you run a campaign on social media, for example, you can pull revenue figures from the online shop and link them directly to the clicks and conversions the campaign has generated. The total profit minus the campaign costs gives you your ROI.
A simplified example of the calculation looks like this:
Let's say you spend DKK 20,000 on a video ad and achieve a profit of DKK 170,000. You then calculate ROI = ((170,000 – 20,000) / 20,000) × 100 = 750%. In other words, you've generated DKK 7.50 in return for every krone invested. You can use that insight to allocate budgets going forward — perhaps increasing video production, testing new ad formats or adjusting your content strategy.
However, you should always take the time horizon into account. ROI doesn't measure how long an investment takes to pay off. A quick campaign can have a high ROI in the short term, while brand building or organic SEO can deliver a lower but more stable return over a longer period. It's therefore important that you tailor your analysis to the purpose and see ROI as one of several inputs to your decisions — alongside KPIs such as conversion rate, engagement and customer lifetime value.
What should you be aware of?
When you use ROI, be aware that the measurement is only as accurate as the data you base it on. You should therefore ensure consistent data sources and uniform calculation methods, so your comparisons hold up. At the same time, keep in mind that ROI doesn't show the whole picture. It doesn't take into account time differences, external factors or long-term gains such as brand value and customer loyalty.
In your marketing strategy, it's therefore a good idea to combine ROI with qualitative measures, so you don't focus only on short-term returns. That way, you get a more balanced evaluation of your overall performance and can make decisions that strengthen both your finances now and your positioning in the longer term.
