I recently took a leadership role in Managing the SEO/SEM efforts for a profitable direct marketer who has a sucessful web site. That said, I have 3 year experience w/online marketing. I am familiar with the world of ROI (campaign rev-share metrics), however my company asked me today what where the "industry" averages for online ROI via online merchants.

We are currently running at an ROI of 3/1 (Google & Yahoo) meaning for every dollar spent in advertising we are getting $3 back in sales.

Or for every $25k spent we get 75K in search demand. This is of course before Gross Margain and Company overhead. My Director, has what I would call our "nector" calculator (based on year metrics and forecast) the ROI must haves's.....

Therefore does anyone know what is considered acceptable in regards to ROI for online merchants?

What are the averages? Are we tredding above water or below water?
If any one knows of any online resources that might shed some light please pass them along.

Direct Marketer- Boston

I think this varies so much by advertiser and specific industry that there is no one "average" for all online merchants. What's an acceptable ROI for my business might be totally unacceptable for another. Even within an industry, the ROI can vary widely depending on internal variables - although you're saying you're not including overhead et al in your calculation, so there's probably less variability with that out of the equation.

Maybe this stat does exist but I don't know how relevant it is. What matters is whether your ROI is meeting your company's objectives or not.

My opinion!

Melissa

Melissa,

Thanks for the repsonse. It was helpful. Although, I spent yesterday crunching numbers and was simply amazed at my findings. Here is what I came up with.

If I take a basic ROI meaning demand/ad expense I Need a 3/1 ROI to be at the breakeven point. Meaning if I spend 25k and get back 75k I am at breakeven, but at 75k plus in sales its profit. Therfore I need to achevie a 3/1 ROI to not lose direct money.

I have based this on the metrics of:
ROI%= to Demand (less) product cost (less) corporate expenses (lets just call it gross profit (divided) by the cost of the ad-campaign (times) 1.

I wish this painted a better picture, however, you can't gagde LTV and the expsoure in impressions. I don't care what anyone says impressions does create branding over time...

Thanks again,

caugas