How to Calculate ROI of Your Digital Marketing for Fashion Brands

How to Calculate ROI of Your Digital Marketing for Fashion Brands
The ROI or Return on investment is a financial ratio used in the business world, which can analyze the profitability provided by the performance of a series of actions.

Currently, there are thousands of metrics that give us the ability to quantify the number of clicks, likes, impressions a post gets. But how do we measure whether the investment in the fashion campaign has been successful? At The SEO Team, we analyze it thanks to the following ratio...

This ratio can be applied to any business, financial, economic, marketing field...

ROI = (profit obtained - investment) / investment

The ratio will offer us a percentage, the interpretation of this is simple; the higher it is, the greater the benefit we have achieved with the investment. The percentage reflects the return on each invested coin.

If the percentage turns out to be negative, the marketing strategy is reporting losses; therefore, it would be necessary to modify it, because the company would be losing money.

The calculation of this ratio is an essential factor when determining future projects, providing value on those projects that are most beneficial for the company.

Return on investment for Marketing

The ROI directed to the Marketing strategy shows us the results of the advertising campaigns. That is, the relationship that is created between the investment that is allocated to advertising and how many sales are obtained thanks to it.

Thanks to this information, we can make a study of what content is generating positive results, the use of influencers, the blog... It is such a general ratio that can be used in many types of marketing actions:

ROI is a determining factor to be able to appreciate that in recessive business cycles the choice to shorten the marketing budget is a bad idea since marketing is one of the tools of the company that brings more income. Thanks to the calculation of this ratio, this can be verified and justified.

And how do I calculate it?

To calculate ROI in the marketing world, we do not do it in a general way, but we do it by differentiating each of the actions, thus analyzing which are more profitable.

Knowing which marketing actions are more profitable for our projects is an important fact, since thanks to these projects, we can stand out in the fashion sector and its competition, which is increasing every day. Thus, choosing the projects that bring us closer to our advertising objectives and check the effect our campaigns have on the public.

Fashion Brands and ROI

Return on investment has long been one of the biggest challenges for fashion companies, given the huge increase in competition in this sector.

Therefore, a key factor in improving the results of the company is to keep control of the ROI oriented to marketing, because one of the biggest problems is the seasonality of this sector. This ratio is continuously updated and is an indicator of whether the strategy dedicated to increasing sales is well structured and elaborated.

Being able to calculate the ROI of our fashion projects, makes it easier for us which projects bring us profitability since this sector is continuously updated and at the same time our projects and the large styling firms adapt to these changes quickly.

One of the most widely used strategies to increase ROI today is the use of influencers as the main factor when generating advertising campaigns since they increase brand awareness and drive sales. According to various contributions from companies that are committed to this strategy, this type of marketing offers them an ROI 10 times greater than their old traditional marketing strategies.

The use of this method makes it challenging to measure ROI on large scales, although the directors of these companies indicate that the calculation of this ratio is an elementary factor to verify if the use of influencers in their marketing strategy adds positive value to their company.

Some companies try to measure ROI by counting the number of times a post is commented on or shared.

Applications to measure ROI

Today, many of the applications most used by companies in the fashion sector value the importance of analyzing ROI; therefore, they offer us the possibility of calculating it quickly and easily. This solves the problem of digital marketing of the selection of data used for the calculation, such as currencies, seasons, regions...

Another method of computing this ratio is through the Excel spreadsheet, which is a slower process, but which offers us a more detailed analysis of expenses and benefits.

Text written by Hamza Sarfraz and edited by João Patrício and Jennifer Costumero.

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