The DRR metric is popular in marketing in the Russian Federation, while in other countries they focus more on ROI. This is an indicator that characterizes the profitability of a campaign. The main difference between ROI and DRR is that absolutely all expenses are recorded to calculate the former:
ROI = (Profit – Costs) / Costs × 100%
Profit is the total amount of money received due to the effectiveness of advertising, and costs are all expenses on its promotion.
There is also ROMI – the inverse of the DRR formula for advertising:
ROMI = (Revenue – Costs) / Costs × 100%
It can be used to calculate how much your advertising investment has paid off.
Now to the ROAS metric, which can also be used to calculate the return on investment. It can be calculated using the following formula:
ROAS = Income / Expenses x 100%
Revenues are the money chinese overseas europe data package received by the company through promotion, and expenses are the total amount spent on advertising. Using this formula, it is possible to evaluate the productivity of a particular advertising channel.
In this case, no additional costs (for a designer, copywriter, etc.) are taken into account. Only what is invested to launch and promote the advertising campaign. This is the main difference between ROAS and ROI.
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Alexander Kuleshov
Alexander Kuleshov
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Examples of calculating the DRR
The DRR in the marketing environment is clear to everyone, but for ordinary people it is worth explaining the principles of calculating the share of advertising expenses using specific examples.
First, it is necessary to record the important points:
specify the terms of the promotion (month, quarter, year);
decide on the advertising channel (exclusively outdoor advertising, only contextual advertising, or maybe all at once);
collect accurate cost data;
summarize data on income for past events, promotions, etc.
Every company should have a marketer to conduct regular calculations regarding advertising revenues. Only in this way can the organization quickly offset losses from a failed campaign and reorganize activities with changed inputs.
Examples of calculating the DRR
Source: shutterstock.com
Once all the important data for the calculation is recorded, you can start working. Let's give an example.
So, let's imagine that the development company "Paradise in a Shalashe" is organizing the sale of country houses in a new cottage village. Estimated time - 30 days. For this period, advertising costs are as follows:
contextual – 360 thousand rubles;
social networks – 240 thousand rubles;
external – 159 thousand rubles.
During this period, developers sold 33 houses for a total of 185 million rubles. Thanks to analytical calculations, it is known that:
13 houses worth 65 million sold through contextual advertising on websites;
4 houses worth 35 million sold through social media advertising;
16 houses worth 85 million sold using outdoor advertising.
DRR of contextual advertising: 360,000 / 65,000,000 × 100% = 0.55%.
Social media advertising ROI: 240,000/35,000,000 × 100% = 0.68%.
Offline advertising DRR: 159,000 / 85,000,000 × 100% = 0.18%.
According to the data obtained, we see that less money was spent on advertising in social networks than on contextual advertising, but it brought the company much more income. Outdoor advertising did not require serious expenses, but in fact there was not much benefit from it. Such mathematical calculations will help optimize the company's expenses on purchasing advertising in the future.