Let’s Talk Numbers – Calculating the ROI of Your Affiliate Promotions

One thing that is important to do is to figure out your return on investment (ROI) for each promotion you run. You want to determine income by promotion instead of overall because what if 80 percent of your income is coming from just one product? What if a product you think is amazing doesn’t make any sales at all? What if all your assumptions are wrong? If you don’t study the ROI of different affiliate promotions, you’ll never know and will miss opportunities for more commissions from the same amount of work.

What is ROI?

Return on investment is the term given to represent the difference between income and expenses. So, if you brought in 1000 dollars (total revenue) but you spent 500 (total cost) to make that 1000 dollars, your net income (Total Revenue – Total Cost) is 500 dollars. That means your ROI is 100%. You can use this calculator to help you. ( https://www.omnicalculator.com/finance/roi)

How to Calculate ROI?

Above you have a link to an ROI calculator, but it also helps to understand the ROI formula.

ROI= Total Revenue – Total Cost / Total Cost *100

So

ROI = 1000 – 500 = 500 / 500 = 1 * 100 = 100 percent

Just plug in the numbers that you discover when you add it all up and do the math, and you have your ROI.

Knowing the ROI can help you determine if it was worth it or not to promote that product and if you should promote it again. Having a negative ROI could mean that it’s not worth it. Consider many factors aside from ROI in your decision-making, too. Maybe it still was worth it if you built your list bigger, expanded awareness of your business, and created more lifelong customers.

If you use detailed link tracking, you can calculate the ROI for different types of campaigns for the same product, such as online ads, video marketing, email marketing, or social media.

What to Do with the Numbers?

As mentioned above, sometimes it can seem as if you get a number that doesn’t add to your bottom line. It could mean you broke even, or you even lost money, but there are other factors to consider. Breaking even is good and, as mentioned, it may mean you gained some other things that weren’t directly monetary for that promotion but using that number will help you make decisions going forward.

Here are a few choices you can make when you know your ROI.

• Keep Promoting – You’re getting a good return making 100 percent, so you decide to keep promoting it just like you are now since it’s working very well for you.

• Promote More – The ads and landing pages are doing well to convert so you can choose to get your product promotion in front of more people by spending more money on ads such as Google or Facebook ads.

• Tweak Things – If you do the math and figure out that you’re not getting a return on your investment, you can start to tweak things to find out if you can boost revenue or not. For example, maybe you also notice that while you’re getting lots of clicks to your landing page (sales page), conversions there are slow or nonexistent. Find out if the product creator will fix the landing page or if you know that the product is good, perhaps do a better review, or ask the creator to do a webinar or something to help.

• Stop – Sometimes the investment is just gone but knowing the ROI number will help you make a wise decision to stop promoting it. You can then switch your resources to promoting something that is selling well.

Using the ROI number to help you determine whether you need to keep going, do more, tweak, or stop is an important way to improve your affiliate marketing business. Making decisions based on data is always preferable to guessing and using your gut or emotions.

Perhaps you calculate your ROI and the results are just OK but you want to improve.  You are not sure what steps you can take to tweak things. There are so many variables.  Which campaigns need work?  Is it your email marketing, video marketing, online ads?

By tracking each of these you can get a good picture of where the issue might be.  Perhaps your ads are doing well but your email marketing is not.  Is it your emails themselves that are failing?  Have you attracted the right audience to your email list?

Maybe your email and ads are doing OK but your video marketing is a dud.  You know the product sells based on your other campaigns and you want to improve your video marketing.

If you are not sure what steps to take to improve things, you can always go back to the drawing board.  With the help of the Master Affiliates Program (MAP) you can follow the training and gain insight into how to improve your results.