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Glossary of Mobile Advertising Terms

ROI (Return On Investment)

What is ROI (Return On Investment)?

ROI (Return On Investment) is a measure on how much money you earned from ads compared to how much you have spent on those ads. Basically, it’s used to measure the efficiency of an investment.

How is ROI measured

ROI is measured by dividing your overall cost of investment with the difference between the gained revenue (investment) and overall cost. ROI = ((Revenue - overall cost)/overall cost) x100%. For advertisers, ROI is especially important as it’s probably their most vital metric when evaluating the success of a campaign. Still, that doesn’t mean that only advertisers have a use for ROI since it plays an important part for everyone. Since it’s relatively easy to explain and calculate it can have a variety of applications.

Why is ROI analysis important

For example, if one has multiple choices to invest something, measuring the ROI can help select the better option. Although, it’s worth noting that just relying on ROI for prioritization of investments is a bit risky as it might not show the whole picture. For mobile advertisers, ROI plays the same important role and those advertisers that want to increase their ROI should make their ads “specialized” for mobile devices as much as possible. There is also a “subcategory” of ROI called SROI which stands for Social Return On Investment.