You're planning a £5,000 marketing campaign. How much revenue do you need to generate to make it worthwhile?

The Investment

Marketing spend: £5,000

Breakdown:

Common Marketing ROI Benchmarks

Industry standards:

Target: 200-400% ROI (£10,000-£20,000 return on £5,000 spend)

But Revenue ≠ Return

The mistake most people make:

"We spent £5,000 on ads and made £15,000 in sales. That's 200% ROI!"

Wrong. You need to subtract the cost of delivering those sales.

Calculating Net Return

Sales generated: £15,000

Cost of goods sold (COGS):

Net return: £15,000 - £6,875 = £8,125

ROI: (£8,125 - £5,000) ÷ £5,000 × 100 = 62.5%

Not 200%. Just 62.5%.

Break-Even Analysis

What revenue do you need to break even?

Break-even net return = Investment

If net margin is 54.2% (£8,125 ÷ £15,000):

£5,000 ÷ 0.542 = £9,225 revenue

You need £9,225 in sales just to break even.

Target ROI Scenarios

Conservative Target: 100% ROI

Net return needed: £5,000 + £5,000 = £10,000

Revenue needed:

£10,000 ÷ 0.542 = £18,450

That's 3.7× your ad spend in revenue.

Aggressive Target: 300% ROI

Net return needed: £5,000 + (£5,000 × 3) = £20,000

Revenue needed:

£20,000 ÷ 0.542 = £36,900

That's 7.4× your ad spend in revenue.

Time Horizon Matters

Scenario 1: Immediate sales (1 month)

Scenario 2: Sales over 6 months

Scenario 3: Sales over 12 months

Marketing typically returns within 3-6 months for direct response campaigns.

Customer Lifetime Value (LTV)

Don't just measure first purchase:

Customer A buys £200 once = £200 LTV

Customer B buys £200, then:

If your campaign brings 50 customers:

First-purchase revenue: 50 × £200 = £10,000

Net: £4,575 (after COGS)

ROI: -8.5% (loss!)

12-month LTV revenue: 50 × £730 = £36,500

Net: £19,798

ROI: 296% (win!)

True marketing ROI includes repeat purchases.

Conversion Rates

How many customers do you need?

If average order value is £300:

£15,000 revenue ÷ £300 = 50 customers

If your funnel:

You need 0.59% conversion to hit £15k revenue.

Industry benchmarks:

0.59% is achievable but requires solid targeting and offer.

Tracking the Campaign

Measure these metrics:

Week 1-2:

Week 3-4:

Month 2-3:

If after 4 weeks you have <20% of target sales, pause and optimize.

When to Stop the Campaign

Stop if:

Don't throw good money after bad. Cut losses early.

Scenario: Campaign Underperforms

Actual results after 3 months:

Options:

1. Write it off (£5,000 loss, learn from it)

2. Extend campaign (spend another £2,000, aim for £12k more revenue)

3. Retarget existing traffic (£1,000 retargeting spend, 30% of visitors convert later)

Most campaigns underperform in first 30 days, then improve as you optimize.

The Long-Term View

Good marketing builds:

These aren't in your immediate ROI but add long-term value.

If you only look at 3-month ROI, you'll undervalue marketing.

Realistic Expectations

First campaign: 50-150% ROI (you're learning)

Optimized campaigns: 200-400% ROI

Mature campaigns: 300-500% ROI (rare, usually after 12+ months of optimization)

Your £5,000 campaign:

Aim for 150-200% and you'll be happy.

The Lesson

Marketing ROI isn't just revenue—it's net profit after COGS. Always factor in:

Use our ROI Calculator to set realistic targets before you spend.