The investment return of the advertising industry can be measured by indicators such as return on investment (ROI) and return on advertising expenditure (ROAS), and its return on investment varies due to various factors. Here is a specific introduction:

Measurement indicators of investment return

Return on Investment (ROI): It is an indicator that measures the overall investment return, considering all input costs, including advertising expenses, operating costs, product costs, etc., and can comprehensively reflect the profitability of advertising placement. The calculation formula is: ROI=(net profit ÷ investment cost) × 100%. For example, investing $5000 in an advertising campaign resulted in a total revenue of $15000, minus $2000 in operating costs, resulting in a net profit of $8000. Therefore, ROI=(8000 ÷ 5000) × 100%=160%.

Return on Advertising Expenditure (ROAS): It is a core indicator for measuring the revenue return brought by advertising expenditure, and evaluates the direct effectiveness of advertising activities by calculating the ratio between advertising revenue and advertising expenditure. The calculation formula is: ROAS=advertising revenue ÷ advertising expenditure. For example, if $1000 was spent on Facebook advertising and the ad generated $3000 in revenue, then ROAS is 3, which means that for every $1 spent, $3 in revenue is generated.

Investment return on different forms of advertising

TV Advertising: According to Thinkbox's research, during a 24 month investment return period, TV advertising (including linear and on-demand TV advertising) accounts for 54.7% of the total advertising profit, with an average profit of 4.11 pounds for every 1 pound invested. In the week before advertising placement, linear TV advertising accounted for 27.8% of the profit generated by advertising.

Pay per click advertising (PPC): PPC advertising is the second highest return on investment form of advertising, accounting for 14.6% of total advertising profits. In the week before advertising placement, PPC advertising accounted for 30.5% of the profits generated by advertising, outperforming television advertising in terms of immediate returns.

Factors influencing investment returns in the advertising industry

Advertising platforms: Different advertising platforms have different user groups, traffic scales, advertising forms, and costs, which can lead to differences in investment returns. For example, advertisements on social media platforms may have high precision and interactivity, which can bring good investment returns; Traditional outdoor advertising has a wide coverage, but its accuracy is relatively low, and the measurement of investment return is also different.

Advertising creativity and content: High quality and creative advertising content can attract users' attention, increase click through rates, conversion rates, and retention rates, thereby enhancing investment returns. On the contrary, unattractive advertisements may lead to user aversion and waste advertising budgets.

Target audience: Accurate positioning and in-depth understanding of the target audience are key to improving advertising investment returns. If advertising can be personalized to specific target audiences, meeting their needs and interests, it can improve the effectiveness and return on investment of advertising.