Here’s a straightforward ROI formula for calculating your returns from mobile ad campaigns that feature integrated coupons. We’ll be posting additional ROI formulas down the road to help you calculate the value of different types of mobile ad campaigns. There are a lot of methodologies out there for calculating the value of mobile coupons, but we’ve chosen a relatively simple one that should work for almost anyone.

As a primer, here are some of the measurable benefits of mobile coupons:

Mobile Coupons Excel At…

• Driving foot traffic to participating locations. The right coupon, served during optimal hours, to a precise geo-targeted mobile audience is essentially guaranteed to reach people who are already out running errands.
• Prompting social share (who doesn’t love sharing good deals with friends and family?). In our recent study on Advertising to Millennials, we found that 49% of young americans are sharing mobile coupons socially.
• Growing a mobile opt-in list. Monetary incentives like coupons are the single most powerful way to encourage consumers to sign up for ongoing re-engagement from SMS or Email marketing campaigns.
• Increasing conversions at point of sale. This goes without saying: just like print coupons, mobile coupons incentivize additional purchases and upsell to increase average basket size. Mobile coupons, however, do a significantly better job of it—boasting 10x the average redemption rate of print coupons.

Related: Why Mobile Coupons have a 10x Higher Redemption Rate than Print Coupons

ROI Formula – Mobile Coupon Ad Units

Essentially, proving ROI with mobile coupon ad units involves comparing the CPM (Cost Per Thousand Impressions) of a campaign against the average value per thousand impressions. Unlike more abstract metrics like brand value, coupons drive conversions with a measurable dollar amount, and as such it’s fairly straightforward to attribute their value.

To calculate ROI, you’ll need to know 3 things about your campaign:

1. # of clicks on the display ad leading to your mobile coupon – (.4% of impressions, average)
2. # of coupon redemptions – (10% of total clicks, average)
3. Average cart size for purchases where a coupon was redeemed. This value is impossible to average, due to the enormous differences between different verticals and different coupon offers

Now, to calculate ROI. We’ll start with the most basic possible version of a mobile coupon ad unit, which delivers a single redeemable coupon upon click-through of the display ad:

Here’s the formula on its own:

([Redemptions/Clicks] x CTR x $ cart size x 1000)/CPM=ROI

Now Generate Additional ROI

Like I said, that was just to calculate ROI for the most basic version of a mobile coupon ad unit. If you really want to maximize returns, you should incorporate a Mobile Opt-In feature that lets consumers voluntarily subscribe to receive additional offers via email newsletters or SMS Marketing. A simple call to action on your landing page like, “Sign Up For More Offers!” is all it takes. FunMobility allows you to manage all these features under one platform.

Related:
Quick Guide: SMS Messaging and Push Notifications Best Practices

Though likely only a small percentage of consumers will opt-in to receive additional coupons from an SMS campaign, the cost of integrating this feature is nominal and the measurable value of each new SMS subscriber is substantial and recurring. Also, the click-through rate is much higher for SMS compared to display ads. To calculate ROI, you’ll need to know:

1. # of Opt-Ins (this value shifts over time, increasing if executed correctly)
2. CTR for SMS messages (average is 28%, but varies greatly depending on execution)
3. The cost per SMS sent (varies by provider, average is $.015)
4. # of Opt-Outs (average is 2% of total SMS sent)

Here’s the ROI formula for Mobile Coupon Ad Units that integrate Opt-In functionality:

Related: Retail Tip – Using Register Receipts To Boost Opt-Ins
Don’t Wake Smaug: How Not to Screw Up Your SMS Campaign