Developing and using your nonprofit marketing budget takes careful consideration. And since nonprofit marketing is essential, it’s especially important to know that your efforts are generating the maximum impact. Understanding ROI can help you evaluate and adjust your strategy.

What is Marketing ROI?

It’s how much money you realized from a marketing campaign compared to how much you spent on the campaign. That metric measures the effectiveness of your marketing efforts relative to the amount invested.

Here’s how to calculate ROI:

The money earned from the campaign minus the cost of the campaign, divided by the cost of your investment = [X]

[X] x 100 = ROI percentage

So, say you invested $500 in a fundraising campaign and generated $2,000 in donations.

($2,000 – $500)/$500 = 3

3 x 100 = 300% ROI

Why is it Important to Measure ROI?

It helps you understand if the money you invest in different marketing strategies and tactics is producing the desired results. That information allows you to optimize your resources and allocate them where they’ll create the most impact. Monitoring ROI also provides you with essential insight into your campaigns, allowing you to make strategic decisions for future marketing efforts.

Tracking ROI is also important for recordkeeping and maintaining transparency with your stakeholders. You can demonstrate how you’ve spent funds and how those expenditures have supported your overall goals.

What is a Good Marketing ROI?

The average ROI for marketing varies by industry and by specific strategies and tactics.

Generally, marketing professionals recommend a 4:1 or 5:1 cost ratio, which will yield a 300-400% ROI. That means you get $4-$5 of desired value for every $1 you spend.

You may also want to consider contextual factors, such as long-term impact, organization size and geographic scope when evaluating your ROI.

Marketing ROI by Channel

Direct mail: Sending personalized letters, impact statements and fundraiser announcements allows you to connect with existing and potential donors The average direct mail marketing ROI is roughly 222% or $4.09 earned for every $1.27 spent, but the quality of your mailing list data and the type of mailer (letter, postcard, etc.) can heavily influence performance. It’s important to include a strong call to action and contact information or a QR code that directs recipients to donate online.

Email marketing: You can generate about $44 for every $1 you spend on email marketing. It’s an effective strategy to connect with current and potential members of your target audience. You can nurture and generate leads effectively through audience segmentation, which allows you to customize email content based on user interests and demographics.

Social media marketing: Using social media to raise awareness for your nonprofit can be a highly effective method of generating ROI. According to a 2023 HubSpot report, the top three social platforms with the highest ROI were Instagram, Facebook and YouTube.

Paid digital advertising: Pay-per-click (PPC) and display advertising can connect you with volunteers, donors and stakeholders at different stages of the decision-making cycle. The average ROI for a PPC campaign is $2 for every $1 spent. Those campaigns are relatively low risk since you don’t need a big investment to get started and you can easily modify your strategy until you find what works best. Your organization may also be eligible for a Google Ads Grant, which gives qualifying nonprofit organizations up to $10,000 per month in “free” ad spend.

MadAveCollective Can Boost Your Nonprofit Marketing Efforts

The MadAveCollective team can help you maximize your marketing ROI so you can devote your energy to serving others. To learn about our services, call 419-725-6500 or send us an email.