You’re investing time and money into multi-channel campaigns—but how do you prove your efforts are driving revenue? How can you confidently forecast future results to secure the right budget?
According to a Gartner survey, 48% of marketers aren’t able to prove the value of their marketing campaigns. Without solid numbers to back up results, gaining executive buy-in for future budgets becomes an uphill battle. That’s where marketing ROI and financial forecast for marketing come into play.
What is marketing ROI?
Marketing return on investment (ROI) measures the revenue generated from marketing activities relative to the cost of those activities. In simple terms, it answers the question: Are your marketing efforts worth the money you’re spending?
How to calculate return on marketing investment
Use the straightforward formula to calculate marketing ROI:
ROI = (Revenue generated−Marketing cost)/Marketing cost
You can also express the ROI as a percentage figure. Just multiply the ROI output by 100, and the answer becomes a percentage.
The math to measure the ROI is simple, but the challenge lies in gathering accurate data—knowing exactly what each campaign costs and how much it brings in. While benchmarks vary, a positive ROI generally means your marketing is working.
Let’s say you run a paid search campaign for a new product launch, and here’s a breakdown of your costs and revenue:
- Marketing cost: $10,000
- Revenue generated from the campaign: $50,000
Now, let’s calculate your ROI using the formula.
ROI= ($50,000−$10,000) / $10,000 = $40,000 / $10,000 = 4
This means your ROI is 4, or 400%. For every dollar you spent on this campaign, you generated 4 dollars in return. This positive ROI shows that your marketing campaign was effective.
What if the ROI is negative?
Let’s explore a different scenario where the revenue generated is less than the marketing cost.
Imagine you spent $15,000 on a social media campaign, but it only brought in $12,000 in revenue.
ROI= ($12,000−$15,000) / $15,000 = −$3,000 / $15,000= −0.2
Here, your ROI is -0.2, or -20%, meaning for every dollar spent, you lost 20 cents. A negative ROI indicates that the campaign didn’t generate enough revenue to cover the marketing costs and might need reevaluation.
This example shows how important it is to track and calculate ROI to assess the effectiveness of your marketing efforts, ensuring you’re investing in the right marketing channels to drive growth.
Linking marketing efforts to financial outcomes to demonstrate ROI
You now know your ROI formula, but how do you link your marketing efforts to actual revenue?
While traditional multi-touch attribution (MTA) models are useful, they’re not foolproof. They track every customer touchpoint and assign credit accordingly. But in reality, the customer journey is often nonlinear, and attribution tracking tools don’t always capture all interactions perfectly.
That’s where Keen’s marketing mix modeling (MMM) differs from MTA. It takes a unique approach to solving this problem by requiring only two key inputs from you:
- Your channel investment over a time period
- Revenue from the channels in that period
Using advanced algorithms, Keen helps you optimize marketing spend by connecting these inputs to financial outcomes, simplifying the complexity of attribution models while still providing accurate insights. This streamlined process saves you from the guesswork and allows you to focus on what truly drives revenue.
Keep learning: The best strategies for marketing spend optimization
Advanced MMM techniques for revenue forecasting
Revenue forecasting isn’t about relying on marketing intuition—it’s about leading data-driven marketing insights. That’s where MMM techniques with approaches like Bayesian MMM come in.
Predictive analytics and machine learning models analyze historical trends, customer behaviors, and past marketing initiatives. They help you anticipate future marketing performance more accurately, which allows for a better marketing mix strategy and resource allocation.
Let’s break it down.
Scenario-based planning
Scenario-based planning involves creating multiple “what if” scenarios to test how different marketing strategies might impact future revenue. For example, you can model what happens if you increase ad spend on a certain channel. Does the additional investment lead to a proportional revenue increase?
Predictive modeling
Predictive modeling uses historical data to forecast and drive profitability. It goes beyond basic data analysis by incorporating patterns and predicting customer behavior based on past actions.
For example, Dramamine—one of our success stories—used a combination of scenario planning and predictive model analysis to plan its off-season marketing campaigns. Armed with this insight, the over-the-counter medication brand implemented new strategies—leading to a rise of 41.8% in incremental revenue and a 9.5% increase in its overall marketing ROI.
Read next: How AI can bridge the value gap between marketing and finance
Key marketing metrics that matter to CFOs
When it comes to reporting to your CFO, it’s all about connecting marketing activities to financial outcomes. While marketers often focus on metrics like impressions or click-through rates, these numbers don’t resonate with financial executives. This is because CFOs want to see how marketing impacts the bottom line—how much revenue it drives and whether the marketing investment is optimized.
Here are important metrics and why they matter:
| iROAS (Incremental Return on Ad Spend) | mROI (Marginal Return on Investment) | ROI (Return on Investment) | ROAS (Return on Ad Spend) | |
| Definition | iROAS measures the extra revenue your ads generate beyond what would have happened organically. | mROI calculates the additional revenue generated from the next dollar spent on marketing. | ROI shows the total profit generated from marketing campaigns after accounting for costs. | ROAS quantifies the revenue generated directly from advertising campaigns compared to the amount spent. |
| Importance | Isolates the impact of ads from other factors driving revenue, making your sales forecast more accurate. | Finds the diminishing returns of marketing investments, evaluating if additional spend creates added value. | Assesses whether your marketing efforts are worth the investment after cost. | Focuses specifically on the paid ad efforts, showing if the money spent on advertising drives enough revenue. |
| Impact on decisions | Determines if the ad spend generates new revenue or cannibalizes organic sales, avoiding wastage of the marketing budget. | Assists in finding the “sweet spot” where the marketing spend maximizes revenue without wasting resources. | Gives a bird’s eye view of the campaigns—a consistently low ROI could lead to cuts in funding. | Gauges the overall performance of paid channels like Google Ads or social media campaigns. |
3 strategies to prove marketing return on investment to financial executives
In a McKinsey survey, 45% of the CFOs mentioned the lack of a clear line to value was the reason to decline or not fully fund a marketing proposal.
Dive into the top CMO strategies to showcase marketing performance in a way that resonates with CFOs’ priorities, which typically revolve around financial outcomes.
1. Use data visualizations to tell a clear story
Executives appreciate clear, logical stories that link marketing efforts to business outcomes. So, when pitching a new campaign or strategy, show executives the data in a way that resonates with them. Frame the story around their strategic goals. If the company is focused on market expansion, show how your efforts helped reach a new target audience and drive growth in those areas.
Present your data visually through charts, graphs, and infographics. The data visualization helps stakeholders quickly grasp key insights without getting lost in numbers. Using an easy-to-use machine learning-driven marketing mix modeling platform like Keen helps here, as it shows the data in a user-friendly way:
Easy-to-understand data presentation by Keen platform
Tip: If you’re creating the charts manually, use before-and-after visuals to show the impact of specific campaigns. For example, if you’re launching an ad campaign, display the revenue trend and how it spiked after following a data-driven media plan.
2. Tailor your message to different stakeholders
Different stakeholders have different priorities, for example:
- For CFOs: Focus on cost efficiency and profitability metrics like revenue growth rate, incremental ROI, and more.
- For CEOs or boards: Emphasize company growth, customer retention, and marketing’s broader impact on long-term business strategy.
3. Address common objections
Executives might push back on marketing ROI, especially if it’s not immediately obvious how a campaign contributes to revenue. Be prepared to handle these common objections:
- “This is just a brand awareness campaign, how does it help sales?”
- Explain that while the immediate brand campaign success measurement is hard to quantify, it’s important for building a pipeline of future customers. Tie it to lead generation or customer lifetime value (LTV), showing how increased visibility today can lead to more customers down the line.
- “How do we know these results aren’t just a fluke?”
- Use historical data to back your claims. If possible, show how similar campaigns in the past have led to sustained results. You can also discuss multi-touch attribution here (one of the few places where the attribution model comes in handy!), showing how various marketing efforts contributed to the final outcome over time.
End your presentation by focusing on future opportunities. Emphasize how continued or increased investment in marketing further drives revenue. By framing your results around financial outcomes and offering clear next steps, you make it easier for executives to see the value of your marketing efforts—and justify future spending.
How to increase marketing ROI
Once you’ve gained the trust of leadership, it’s time to get back to the drawing board and find ways to improve marketing ROI continuously.
- Double down on what works: Identify your highest-performing channels and shift more of the budget there. Cut back on underperformers—no room for vanity metrics. However, make sure you’re still creating a full-funnel marketing strategy to balance final sales and capturing a new audience.
- Get smarter with ad spend: Run continuous A/B tests and scenario planning to find the creatives, headlines, and offers that convert. Scale up only what proves its worth.
- Use predictive insights: Don’t guess—use predictive analytics to anticipate trends and allocate resources where they’ll have the highest impact.
- Align sales and marketing goals: If the marketing teams aren’t feeding quality leads that convert, revenue will suffer. Sync up with sales to close the gaps.
- Monitor the right financial metrics: According to Nielsen’s Annual Marketing Report, 52% of marketers focus solely on metrics like reach and frequency instead of including ROI like the remaining 48%. While such metrics give some insight, you need to measure metrics like mROI and iROAS to truly understand your marketing incrementality. If the numbers aren’t tied to profitability (clicks, views, traffic to a landing page, and more), they don’t matter in most cases.
Forecast your revenue and grow your incremental ROI in marketing with Keen
With Keen’s adaptive MMM platform, you can skip the complexity of attribution models and get clear, actionable marketing measurement insights to help improve your marketing ROI. Our platform simplifies forecasting, helping you optimize budgets and track the metrics leadership cares about.
From predictive analytics to data warehousing and tracking high-impact financial metrics, Keen equips you with the tools to maximize your return on marketing investment and impress even the toughest CFOs.
Ready to see how Keen can transform your marketing return on investment? Book a demo today and discover the difference data can make.
