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We get this question a lot from online merchants. Before we can answer, we need to get one thing straight: ROI is a term from finance that a lot of marketers use to mean something a little different. Read our blog post on How Digital Marketers Misunderstand ROI for more on that. I usually try to use other terms that are more precise. In advertising, when most people say “ROI”, they actually mean “Return on Ad Spend”, which is the total revenue divided by the total ad spend.

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Direct response advertising through Google Ads probably has an ROI greater than any other investment opportunity available to an ecommerce merchant. It’s far greater than most people realize. The real return on investment is obscured by the way traditional cost accounting records the transactions and reports on them on a monthly basis. It’s easy to get distracted by tax accounting rules and forget the fundamentals of solid financial decision making.

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Presented by David Deppner
Meet Magento New York, October 17, 2017

Competition for online advertising is driving up your costs, and it’s not going to get any easier. What can you do to improve your PPC advertising and get even more profitable? This presentation covers some common misconceptions...

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ROI is NOT Profit

Oct 02, 2017 David Deppner

Would you rather have a 10% return on $100 or a 5% return on $1000?

\[ \begin{align} $100 \times 10\%_{ROI} &= $10 \\ $1000 \times 5\%_{ROI} &= $50 \end{align}\]

If you have to pick one or the other, you’d pick the $1000 investment at the lower ROI. In the real world, though, we can usua...

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How Digital Marketers Misunderstand ROI

Sep 25, 2017 David Deppner

I recently had the "pleasure" of working with a marketing consultant who tried to improve performance for a mutual client by focusing intensely on achieving a high ROI across every one of their marketing channels. This type of thinking is very common in the ecommerce and online advertising world......

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