Return on Investment (ROI)
In one sentence
The ratio of gain generated by an investment relative to its cost, used to evaluate whether an investment is worthwhile.
The standard formula is (Gain - Cost) / Cost. The key is accounting for all returns and costs comprehensively and defining a clear timeframe.
Returns on content marketing and AI projects usually fall into several categories: direct orders, saved labor hours, and long-term brand exposure. These should be calculated separately rather than lumped together.
Example
Investing 50,000 RMB in an AI copywriting project that saves 120,000 RMB a year in outsourced writing fees delivers an ROI of 140% based on cost savings.
Related terms
- Customer Acquisition Cost (CAC)
- The average cost to acquire a new customer, calculated by dividing total sales and marketing spend over a given period by the number of new customers acquired.
- ROAS (Return on Ad Spend)
- Sales generated by advertising divided by advertising spend, used to measure campaign effectiveness.
- Customer Lifetime Value (LTV)
- The total revenue or profit a brand expects to generate from a customer throughout their business relationship.
