What does... "ROMI" actually mean?

Benno Maggi explains in his column "What does... actually mean?" terms from the marketing and communications sector. This time he explains the acronym "ROMI".

Romi? That's not the name of the new agency dog or the new intern. No, it's an acronym that currently enjoys almost as much attention as the two above, but spreads far less joy.

At the first hearing, the delegates of the agencies in the customer meeting had probably actually thought that they were talking about a person who was new to the marketing team. The second time, they might have understood ROI and wondered what that was all about: Return on investment was until now only something that bankers, investors or financiers talked about, but not their client's marketing people?

But the third time they realized - thanks to Live-Googlen - that it was serious. After all, the M in ROMI stands for marketing, so it had to have something to do with them.

Make everything provable

So now ROMI is making the blood run cold in the veins of many an agency and customer. Suddenly, calculation is the order of the day! With the Return on Marketing Investments the factor of how much is left for the cause - i.e. the profit - after deducting all marketing expenses is determined as hard as nails. And deducting all expenses means EVERYTHING. That means everything that has anything remotely to do with marketing: Development, consulting, agency and production costs as well as all spending on media (including Google) and - not to forget - catering and travel expenses of the agencies. That adds up to quite a bit. This is now deducted from the revenues that were hopefully generated for the company by such measures. The result of this subtraction is then divided by the sum.

The result of this division is the ROMI. Simple, isn't it? It means 5.5 in very good cases or just 1.0 or even less in bad cases. This means that the company has received back a factor of 5.50 or just a factor of 1 for every marketing franc invested. "But you can't calculate like that" or "Marketing expenditures are not costs, but investments" are the exasperated cries of the agency representatives before they get into the fat cars in the parking lot under the suspicious eyes of the customers and drive away resignedly.

Instead of learning the formula by heart, both sides complain afterwards. Not only about rising gasoline and electricity prices, but also about the fact that advertising measures are now subject to ever stricter controls.

Benno Maggi is co-founder and CEO of Partner & Partner. He has been eavesdropping on the industry for over 30 years, discovering words and terms for us that can either be used for small talk, pomposity, excitement, playing Scrabble or just because.

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