Return on Investment is a ratio which compares the profit or the net income in relation to investment. In practical life it can be used for almost all fields. There is an article on this website with the title The blog phenomenon and return of investment (ROI). Before we explain why we have said ‘Return on Investment can be used for almost all fields” we will go in to a bit deeper on Return on Investment and Marketing ROI.
We wrote in one blog post that Money is Food. Simply because we can not buy food if we have no money – is not it? Many animals stock foods for the future, we stock money so that we can use it when we need. It is not greed but need. Doing a job is not a solution forever. Running several Business is THE permanent most dependable way. It happens that the fat Boss sitting and directing you what to do for you job, suddenly might think, it is better to kick you out, or felt that your situation is becoming like polishing the shoe of your Boss. If you do not have any alternative, you have to continue the virtual shoe polishing. Independence – that is the face of Marketing and in order to run a business successful you need to know Return on Investment and Marketing ROI.
Every professional is actually running an independent business along with this theory of Return on Investment at the back of the mind. Over 50% professionals are not successful not because they are less skillful than the rest 50%, but because they overlook the theory of Return on Investment and Marketing ROI.
What is Return on investment
Return on investment is a ratio which compares the profit or the net income in relation to investment. Return on investment is a financial indicator of the effectiveness of marketing investment returns or profit of the company or individual. It is used to define tangible financial value of the participation of media plans and their results in the variation margin or profit of a business, trade, brand or product. Return on investment is widely used in the analysis of financial institutions as it measures the return on total assets or its ability to generate value, thus allowing to assess the ability to obtain the benefit of the company’s total assets and thereby benefit in relation to the size of its balance sheet.
Return on investment (%) = Net profit / Investment ($) * 100 %
Practical examples of atypical Return on investment
We have said ‘Return on Investment can be used for almost all fields” we will go in to a bit deeper on Return on Investment and Marketing ROI. Now some indirect and direct examples.
Return on investment from Blogs – We have already wrote about the approaches in The blog phenomenon and return of investment (ROI).
Return of investment from a shop – To run a shop one need to buy a space, the materials to be sold and other resources – these are investments. It is important to access the market and the need of the consumers. Just like our Keywords, Global Monthly searches, competitors etc. If I open a shop selling spiritual books beside a night club, it will just give me a negative Return on Investment. If I open a snack’s shop or junk food shop beside an Liquor off shop, I can hope for a good Return on Investment. You will notice the small shops selling Cigarettes – all are in the places where smokers feels the urge to smoke.
Return of investment from a book – If I write a book on how hard work is important, it will be too much to think a good Return of investment from it. Mass readers like to hear how a person fought or hard worked, but never likes to read, how they can make more money with less work. That is why, you will notice there are many award wining books, which emphasizes on ‘how to relax’, but the real truth is – the writer himself probably worked 18 hours or more to write it and market it. He knows the Marketing Return on Investment very well.
Return of investment for the professionals – An instrument might cost me 5 grand USD, I have to think how many days it will run nicely, what is the cost:benefit ratio – this the practical Return of investment from an instrument.
Return of investment from Education?- Return of investment can be either fame or money. Investments are time and Money.
Conclusion on Return of investment
Return of investment is just an ratio to show how successful is your thought. The plan, understanding is way or path for a good Return of investment.