An interesting video from Google on YouTube on calculating ROI, using profit margins.
What thing that’s missing though is “So how do I move into the future?”
Profit margins (and cost of goods sold and revenues) are not static measurements for businesses. There is seasonality involved – and there is randomness involved. While measuring ROI from past campaigns is good, measuring and predicting ROIs for future campaigns is far much better and far more useful.
Just because one product does generate more profits now doesn’t necessarily mean it will continue to generate profits in the future.
Similarly: ROI from the past are not necessarily good predictors of ROI in the future.
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