Marketing in a Minute – Episode 11 | Ahmed Moaaz

ROI asks the simplest question in business: every pound that goes in, how much comes back? (Return – cost) ÷ cost. Use it on the full picture, not on ads alone.

What exactly is ROI?

ROI stands for Return On Investment. The idea is simple: you put a sum of money into an activity, and the number tells you how many pounds of profit came back for every pound you paid. The basic formula: ROI = (return from the investment – its cost) ÷ cost of the investment × 100.

Example: you spent 10,000 EGP on an ad campaign, and it produced sales with a profit of 25,000 EGP after deducting the cost of goods and operations. ROI = (25,000 – 10,000) ÷ 10,000 × 100 = 150%. Every pound you paid came back with one and a half pounds of net profit.

Notice the word “profit”. The most common mistake is calculating ROI on gross revenue instead of profit, so the number looks rosy while the truth is you are losing money.

Why does this number matter more than others?

Because it is the only number that ties marketing to the business’s bottom line. Your views can be excellent, your clicks cheap and your sales high, and yet your business loses money if the profit from sales is less than what you paid to get them. ROI is the final judge that does not flatter.

It is also a shared language with any partner or investor: when you say “every pound I put into this activity comes back as three”, everyone understands you immediately.

What goes into the “cost” line?

This is where most people lose accuracy. The cost of a marketing investment is not only the ad budget; it includes:

• Direct ad spend across platforms.
• The wages of whoever runs the campaign: the period’s share of an employee’s salary, or the agency or freelancer invoice.
• Content costs: filming, design, writing, editing.
• Tools and subscriptions used for this specific campaign.
• Discounts and promotional gifts offered within the campaign.

You do not need complicated accounting, but every real item you leave out makes the number too optimistic and misleads your next decision.

And how do you fairly calculate the “returned profit”?

The other side of the equation needs clarity too. The profit returned from a campaign = the revenue of the sales it brought, minus the cost of goods sold, shipping, payment fees and any variable costs tied to those orders. What remains is the real profit you can attribute to the campaign.

To be honest with yourself, attribute to the campaign only the sales that actually came because of it, not all sales in the period. Use tracking links and campaign-specific discount codes to know the source of every order.

A complete example with numbers

A store launched a campaign with a total cost of 15,000 EGP, split as follows: 12,000 ad spend, 2,000 design and content, 1,000 the period’s share of the manager’s wage. The campaign brought sales worth 60,000 EGP, whose goods, shipping and fees cost 38,000 EGP, so the returned profit before the campaign cost is 22,000 EGP. After deducting the campaign’s own cost, the net profit is 7,000 EGP.

ROI = 7,000 ÷ 15,000 × 100 = about 47%. The campaign is profitable and worth scaling. But notice: someone calculating on revenue would say 60,000 ÷ 12,000 = 500%, a completely illusory number, and someone who forgets the manager’s wage and content cost would arrive at 83%, also higher than the truth.

Is a high ROI always good?

Not always. Watch three cases:

• High ROI at a small scale: a campaign with a thousand pounds and a 400% return still earns only four thousand in profit. The percentage dazzles; the impact is tiny.
• A snapshot ROI that ignores customer value: a campaign that breaks even today but whose customers buy again and again can be a better investment than one that profits today and brings customers who never return.
• High ROI because you are underspending: sometimes you can double spend while ROI falls to, say, 200%, doubling total profit despite the lower percentage. The right decision balances the percentage against absolute profit.

How do you use it in your decisions?

Compare your marketing channels with the same calculation over the same period: search campaigns versus social platforms versus email marketing. The channel with the highest, scalable return deserves the largest share of next month’s budget.

Review the number monthly – return shifts with season, competition and audience saturation. And set yourself a minimum acceptable threshold before launching any campaign: what is the lowest return that makes it worthwhile after all costs? Below that, the campaign stops or gets reworked.

Common mistakes in calculating ROI

Four mistakes recur constantly and corrupt the number:

• Confusing revenue with profit: as we saw, revenue is a big, misleading number. What matters is not sales but what remains of them after costs.
• Measuring too early: some campaigns bear fruit weeks after they stop, especially for products customers think about for a long time. Measuring ROI on day three is unfair to campaigns working correctly.
• Attributing all period sales to the campaign: part of your sales would have come without ads anyway. Without tracking links or dedicated codes you will inflate results without realizing it.
• Forgetting returns: orders customers cancelled or refused to receive must be deducted from campaign revenue, otherwise you are counting profit that never happened.

Summary

ROI is the question “was it worth it?” turned into a number. Calculate it on net profit, not revenue; put everything you truly spent into the cost; and use it to compare your channels monthly. Whoever runs marketing with this number knows where to put the next pound; whoever ignores it spends on hope and discovers the truth late, when the budget is empty. Make ROI a fixed monthly habit, and your marketing decisions will turn from guesswork into conscious money management.

Keep following Marketing in a Minute: one marketing concept per episode. Have a question about this number? Send it on WhatsApp.