Future Business Leaders of America (FBLA) Advertising Practice test

If an advertising campaign costs $100,000 and generates $250,000 in additional sales, what is the ROI?

1. 1.5%

2. 150%

3. 15%

4. 250%

The correct answer is: 150%

To find the Return on Investment (ROI) for an advertising campaign, you can use the formula: \[ \text{ROI} = \left( \frac{\text{Net Profit}}{\text{Cost of Investment}} \right) \times 100 \] In this case, the net profit is calculated by taking the additional sales generated and subtracting the cost of the advertising campaign. The additional sales generated is $250,000, and the cost of the campaign is $100,000. So, the net profit would be: \[ \text{Net Profit} = 250,000 - 100,000 = 150,000 \] Next, plug that into the ROI formula: \[ \text{ROI} = \left( \frac{150,000}{100,000} \right) \times 100 = 1.5 \times 100 = 150\% \] This result means that for every dollar invested in the advertising campaign, there is a return of $1.50, indicating a highly effective campaign. A high ROI, such as 150%, signifies that the campaign generated significantly more in revenue compared to what was spent, making it an impactful investment in advertising.