Glossary · Return on Marketing Investment
What is ROMI (return on marketing investment)?
ROMI (return on marketing investment) shows how many times the profit from ad-driven sales exceeds what you spent on those ads. The right way to calculate it is on gross profit, meaning revenue minus cost of construction. Many developers calculate it on revenue instead, and then ROMI comes out several times higher than it really is.
An example with a developer's numbers
Say a lead costs MX$300 and 2% of leads turn into a sale (the global benchmark). A project spends MX$300,000 on ads: that's 1,000 leads and 20 sales. With an average price of MX$3.5M, revenue comes to MX$70M, and advertising per sale works out to MX$15,000.
| Metric | Calculation | Result |
|---|---|---|
| Leads | 300,000 ÷ 300 | 1,000 |
| Sales | 1,000 × 2% | 20 |
| Advertising per sale | 300,000 ÷ 20 | MX$15,000 |
| ROMI on revenue | (70M − 0.3M) ÷ 0.3M | ≈ 23,200% |
The number looks huge because a home's price is hundreds of times larger than the ad spend per sale. So for a developer, ROMI is useful for comparing channels and periods against each other, and its absolute value tells you little.
How to use ROMI in project sales
- Calculate ROMI for each channel: Meta, Google, listing portals, brokers. For that, the CRM has to keep the lead source all the way to the closed deal.
- Compare channels using one calculation method. Revenue-based ROMI for one channel and profit-based for another give you a false picture.
- Account for the lag. Sales from this month's ads arrive weeks or months later, so a one-month ROMI almost always undervalues new channels.