One phrase that I’ve seen a lot lately is ROI, or return on investment. Many people are basing the success of their marketing on the ROI, and though that is a good way of judging the effectiveness of a particular marketing method, I feel that it’s flawed overall.
The ROI should be a figure that you set as a baseline. For example, one of your goals should be at least a 100% ROI on your next campaign. With that in mind, you can judge the effectiveness of it, and hence determine whether or not your marketing strategy is working out in the way that you predicted. With that type of information, you can then determine if you are going to make any changes.
However, the big figure that you should always be looking at when marketing is your profit. The amount of money that you actually make is much more important than the return on your investment. Think of it like this: if I spent $100 and made $300, that’s a 200% ROI, which is definitely a good ROI. However, if I spent $1,000 and made $2,000, that’s only a 100% ROI. However, the first example yielded $200 in profit, whereas the second yielded $1,000 in profit.
So what’s more important here? $200 profit and 200% ROI, or $1,000 in profit and 100% ROI? Personally, I’d take the $1,000 and the lower ROI simply because, at the end of the day, I have $800 more in my pocket.
The Right Mindset
Focus on creating profit, and once you are doing so, optimize and tweak your campaigns to maximize your conversions and hence the amount that you earn. Affiliate marketing, as a business, is privy to the same risk vs. reward figures as any other business. The fact that it’s done entirely online in an intangible marketplace is irrelevant.
For your next campaign, really consider your total profit figures and not just your ROI. If you’re experiencing a steady 50% ROI, why not spend more to make more?
