ROI, or Return on Investment, is one of the key indicators of your affiliate marketing campaign’s success of failure. Analyzing your campaigns’ ROI figures is a must both for merchants, and for affiliates. As a result, you get a better understanding of what works and what doesn’t. And since at the end of the day, it’s all about optimizing your investments in a way that brings you most income, I recommend that everyone analyzes the ROI of their affiliate marketing efforts on a regular (weekly or bi-weekly) basis.
But how do you do that?
It is actually very simple. ROI is generally expressed as a percentage or a ratio. To calculate your ROI from any given campaign/marketing effort, you really need to have just two pieces of information: (a) your gross profit, and (b) the investment which was required to receive that profit. Then you go by the following formula:
ROI = (Gross profit – Investment) / Investment * 100
So, for example, if a campaign yielded $100 in gross profit, and it took you $80 to generate that profit, your ROI from that campaign was (100 – 80) – 80 * 100, or 25%. In other words, the campaign had a 25% ROI.