Today, I will discuss about what ROI (Return on Investment) is and how to calculate it. I am going to use an organization to calculate their ROI and explain what kind of tangible and intangible benefits they earn from their investment.
ROI (return on investment) is how much profit or cost saving is realized. An ROI calculation is sometimes used along with other approaches to develop a business case for a given proposal. The overall ROI for an enterprise is sometimes used as a way to grade how well a company is managed.
There is the formula of ROI:
Samsung is the largest mobile phone maker in its home market of South Korea and the third largest in the world. In addition to mobile phones, Samsung also manufactures things such as televisions, cameras, and electronic components.
Samsung has always used social media to increase their ROI. For example, Samsung used Facebook ads to promote Samsung Galaxy S3 smart phone in 2012. Samsung spent $10 million dollars and achieved $129 million in sales directly attributable to their Facebook campaign. Here is more information.
There is the ROI formula of Samsung:
Cost of investment = $10,000,000
Gain of investment = $129,000,000
ROI = [($129,000,000 – $10,000,000) / $10,000,000] x 100%
ROI = 1190%
It was very high percentage. The mean is that Samsung had great gain through using Facebook ads to promote Samsung Galaxy S3 smart phone. Their Facebook page was joined by more people. So, that is what tangible benefits they earned. Samsung also earned a great intangible benefit. There were many people to know Samsung through Facebook. That was a great chance to increase their reputation.
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