Measuring the ROI of paid advertising campaigns in digital marketing and its effect on business profitability

Ra'D Almestarihi, Ahmad Ahmad, Rana Husseini Frangieh (), Ibrahim Abu-Alsondos, Khaled Khamis Nser and Abdulkrim Ziani
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Rana Husseini Frangieh: SUAD - Sorbonne University Abu Dhabi

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Abstract: In today's digital age, businesses invest substantial resources in paid advertising campaigns to enhance their online presence and attract customers. This study delves into the critical aspects of measuring the return on investment (ROI) of such campaigns and explores their impact on overall business profitability. Through a comprehensive analysis of data from various industries, this research investigates the effectiveness of paid advertising in generating revenue and its role in shaping a company's bottom line. Key findings indicate that calculating the ROI of paid advertising is a multifaceted challenge, involving factors such as ad spend, conversion rates, and customer lifetime value. The study also underscores the importance of tracking and attributing conversions accurately to assess the true impact of advertising efforts. Ultimately, the research suggests that while paid advertising campaigns can be costly, a well-executed and data-driven approach can yield a substantial positive effect on a company's profitability, making them a valuable component of a comprehensive digital marketing strategy. As businesses navigate the dynamic digital marketing environment, this study provides valuable insights for marketing professionals, business leaders, and decision-makers seeking to enhance their advertising strategies and drive improved financial performance.

Date: 2024
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Published in Uncertain Supply Chain Management, 2024, 12 (2), pp.1275-1284. ⟨10.5267/j.uscm.2023.11.009⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04931852

DOI: 10.5267/j.uscm.2023.11.009

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