ROI, which stands for return on investment, is a standard term used to calculate how much net income you get from specific investment strategies. For example, you have invested a sum of $10,000 on a TV advertising campaign. If you can measure a net sales increase of 100,000 units and each unit gives you a net profit of $1, then your ROI on the campaign is $10 for each dollar invested.

The same principle is applicable for online marketing too. If you have employed a search engine marketing firm to kick start your online store, it is important to measure if your money is spent well. The way this ROI is calculated could be slightly different though. Instead of measuring direct sales, you may need to consider other ‘user actions’ too. These actions are usually called leads in online marketing parlance.

These leads could be any of the following user performed actions:
1. Completing a form to express interest
2. Subscribing to a trial/free offer
3. Buying a product
4. Registering for a service
5. Referring a friend
6. Using a service
7. Downloading a product
8. etc etc

As you can see, a lead can be defined as any action that is beneficial to the advertiser. If subscribing to a trial period offer is a lead, then the ROI on the investment has to be calculated as the cost per lead (CPL). CPL is also sometimes referred to as CPA (cost per action). A further analysis of ROI can be done to calculate how many of these trial offers convert to an actual confirmed sale.

Before investing in any marketing campaign, you must estimate the ROI and check whether that is acceptable. Once the campaign starts, you must continuously monitor it to ensure that the ROI is in the acceptable range. If it is not, you may have to make course corrections. Remember, planning, if done properly and implemented can bring huge success to any business.