ROI Defined

ROI stands for "return on investment" and is a key performance metric that measures the effectiveness and profitability of marketing campaigns.

In other words, ROI helps businesses assess whether their investments are generating a positive return after expenses or if adjustments are needed to remain profitable.

ROI in mobile marketing is a crucial metric for businesses to assess the efficiency of their mobile marketing campaigns, allocate resources effectively, and make data-driven decisions to optimize their mobile marketing efforts for better results.

How to Use it in a Sentence

The company analyzed the ROI of its recent mobile advertising campaign and found that for every dollar invested, they generated three dollars in revenue, making it a highly successful and profitable endeavor.

Common ROI FAQs

The formula for calculating ROI is:

ROI = (Net Profit from Marketing Campaign - Cost of Marketing Campaign) / Cost of Marketing Campaign

Simply subtract the campaign's total cost from the revenue generated by the campaign, divide by the cost, and multiply by 100 to express it as a percentage.

Here are some tips for calculating the ROI of some of your various marketing campaigns:

Use Attribution Models: Attribution models help assign credit to various touchpoints in the user journey. For example, a customer may interact with multiple marketing channels (e.g., social media, email, push notifications, search ads) before making a purchase. Attribution models like first-touch, last-touch, or multi-touch attribution can provide a more accurate view of how each channel contributes to conversions.

In the Last-Touch Attribution Model, all credit for a sale goes to the last marketing interaction that directly led to the purchase. For example, if a customer made a purchase after receiving an email, the entire credit is attributed to the email campaign, even though the customer may have interacted with other marketing channels earlier in their journey. This model is straightforward but may not capture the full impact of all marketing touchpoints. Mapping your unique user journey is a great way to better understand your touchpoints and evaluate how you can make them more effective.

Include Both Direct and Indirect Costs: In addition to direct campaign costs, consider indirect costs that might not be immediately apparent. These can include salaries of marketing team members, software subscriptions, and overhead costs associated with campaign execution. Accounting for all relevant expenses ensures a more comprehensive ROI calculation.

Segment Your Data: Analyze ROI for different segments of your audience or various marketing campaigns separately. This allows you to identify which user segments or campaigns are performing better and where optimizations are needed. For example, you can segment your audience by demographics, like age or location, to identify which groups are generating the highest ROI. For example, if you discover that customers aged 18-24 have a significantly better ROI than other age groups, you can allocate more resources to target that specific segment with personalized marketing strategies.

Calculate User Lifetime Value (LTV): User lifetime value is the total revenue a user is expected to generate over their entire relationship with your business. Understanding LTV can provide valuable insights into the long-term impact of your marketing efforts and help you prioritize customer retention strategies.

Using LTV to calculate how much value a newly acquired user brings to your app gives you helpful direction for how much you should spend on acquisition costs.

Here’s how to calculate user LTV:

Average monthly revenue per customer / Monthly churn

For example, your average user generates $2.30 per month and you have a monthly churn rate of 70%. Using Formula #2 ($2.30 / .70) we arrive at the value of $3.29, or your average user lifetime value. You also now know that you should not be paying more than $3.29 to acquire a new user.

For a deeper dive into everything LTV, read our guide on understanding mobile user lifetime value!

Implement Marketing Analytics Tools: Marketing analytics tools and platforms can automate data collection and analysis, making it easier to track and calculate ROI accurately. These tools often provide real-time data and visualization options, simplifying the process.

For mobile marketing specifically, it can be difficult (or nearly impossible) to figure out what the outcome of a specific message is. OneSginal provides an industry-leading message analytics platform that easily quantifies which messages are driving engagement and sales so you can maximize your mobile marketing ROI. From confirming deliveries by device to tracking user-level data with a robust analytics API, OneSignal takes pride in letting the data do the driving.

A "good" ROI ratio can vary widely depending on factors like industry, business objectives, and market conditions. What constitutes a good ROI for one company may not be the same for another.

In some industries with high competition and thin profit margins, a good ROI might be relatively low, such as 10% or 15%. In other industries with higher profit potential, such as tech startups or certain investments, a good ROI could exceed 30% easily.

It's essential to establish benchmarks and performance expectations based on your specific business goals and industry standards. Additionally, ROI should be considered in the context of your investment's risk level. A higher ROI might come with higher risks, so you should evaluate ROI alongside other factors like risk tolerance and long-term sustainability.

Ultimately, what matters most is that your ROI exceeds your costs, resulting in a profitable venture!

Mobile marketing KPIs include metrics like Cost Per Install (CPI), Cost Per Click (CPC), Cost Per Acquisition (CPA), Customer Lifetime Value (LTV), and Mobile App Conversion Rate. All of these metrics help businesses evaluate the effectiveness and profitability of their mobile marketing efforts.

Several factors within mobile marketing can contribute to a higher return on investment (ROI).

Profit starts with precise audience targeting. Remember, you don’t want to just “reach people,” you want to reach the right people who are more likely to convert. Utilize data-driven insights, demographics, location, and user behavior to refine your targeting strategies. Audience targeting also helps you personalize your messaging strategy. Personalized marketing messages based on user preferences and behaviors can significantly improve mobile ROI. Now more than ever, mobile users expect a tailored experience with relevant content being delivered to them on a regular basis.

The next one should go without saying, but we’re going to remind you anyway. Ensure that your mobile content, whether it's a website, app, or advertising, is mobile-responsive and provides an excellent user experience on various devices and screen sizes! You can’t be profitable if you’re not properly visible on the right channels.

Some of the best ways to boost ROI may not even take place on your platform. If you have a mobile app, optimizing it for app stores (like the Apple App Store and Google Play) can increase visibility and downloads. App Store optimization (ASO) strategies include keyword optimization, appealing visuals, and positive app store ratings and reviews. Not sure which app logo is most enticing or which description prompts quicker action? Conduct A/B tests on different elements of your app store listing (or mobile campaigns), such as ad creatives, messaging, and landing pages. Analyze the results to optimize for higher conversion rates and ROI.

If you have a mobile app, strategically timed and personalized push notifications can re-engage users and encourage them to take desired actions, such as making a purchase or returning to the app. Push reminders can be leveraged for abandoned carts, flash sale alerts, personalized product recommendations, and exclusive offers to engage users and encourage purchases. These notifications lead to increased cart recoveries, higher engagement during flash sales, improved customer retention, and more frequent purchases, ultimately resulting in a significant boost in ROI for many mobile apps.

But it doesn’t end with push. Integrate your mobile marketing efforts with other marketing channels (e.g., email, social media, website) to create a cohesive and consistent customer experience. This can help reinforce your brand and message across multiple touchpoints. Take the below example:

A subscription-based fitness app aims to enhance user retention and increase subscription renewals for its premium service. They craft the following multi-channel strategy with the goal of improving ROI.

  • Push Notifications: The app sends push notifications to users who haven't logged in for a while with messages like "We Miss You! Get Back to Your Fitness Goals Today!" These notifications include a direct link to the app for easy access. Additionally, they send push reminders about upcoming live workout sessions and personalized fitness tips based on the user's activity history.

  • Email Marketing: Users who haven't engaged with the app for an extended period receive re-engagement emails with a similar "We Miss You" message. The emails include enticing offers, such as a discount on the premium subscription for returning users. The app also sends personalized weekly workout summaries and achievement emails to motivate users to stay active.

  • In-App Messages: When users open the app, they receive in-app messages highlighting new premium features and benefits, as well as progress-tracking tools. These messages aim to educate users about the added value of the premium subscription and encourage them to upgrade or renew.

  • Live Activities: The app uses Live Activities to help users track their workout progress and biometrics in real time to keep users engaged and motivated.

Looking to help boost ROI in uncertain times? Check out our State of Customer Messaging Report!

Yes! OneSignal provided 425% ROI for users over three years as a result of improved conversions, reduced churn, and powerful platform functionality that scales with clients as they grow.

How did those users get there? By creating cohesive multi-channel messaging journeys across Push, in-app, email, and SMS. By A/B testing messages ahead of time and segmenting your target audience for maximum relevancy, you drastically increase your chances of delivering campaigns to the people who are most likely to convert.