There are two key reasons why CTR is one of the most important metrics for evaluating advertising performance:
Increasing CTR increases CR;
The ad rating depends on this indicator.
CTR has an indirect impact on ROI because the more clicks an ad gets, the more likely customers are to make a purchase.
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When is ROI calculation needed?
As mentioned earlier, calculating overseas chinese in worldwide data the ROI can be used to make more informed management decisions. This indicator allows you to determine the current profitability of the project. This is necessary to avoid making a mistake - investing in a failed business. In addition, with the help of the ROI, the company can identify the most promising ways to develop the business.
ROI shows the amount of profit received from a project as a percentage. By calculating the indicator, an organization can understand what percentage of return each invested ruble provided.
For example, an online store needs to determine the ROI for two products: face creams for dry and oily skin. For the first product, the ROI was 100%. For every ruble invested, there are two rubles in return. Thus, the investment in the product has fully paid off.
The ROI for the second cream was 30%. The investment was only recouped by a third. It turns out that the cream for oily skin was unprofitable. This result does not indicate the need to stop selling the product. However, the company must determine the reasons for the project's unprofitability, evaluate other performance indicators, and make appropriate adjustments. All this will allow finding the optimal solution that will increase the payback.
There is no ideal ROI value. Different types of businesses may have different optimal values. However, the coefficient reflecting the return on investment should be higher than 100%. Otherwise, the project can be called unprofitable.
ROI calculation is necessary to solve the following problems:
determining the overall profitability of the project;
assessment of the effectiveness of a case over a certain period of time;
search for profitable and unprofitable products;
making a decision to stop or continue investing in a project.
Return on investment can be used as a performance indicator for virtually any project/program for which costs and revenues can be accurately measured.