If a marketing effort's ROI formula returns a negative number, what does this indicate?

A negative number resulting from the ROI (Return on Investment) formula indicates that the costs associated with the marketing effort exceeded any returns generated. ROI is typically calculated by taking the net return (returns minus costs) and dividing it by the costs, often expressed as a percentage. When expenses overshadow the revenue generated, the resulting calculation yields a negative value, signaling that the marketing strategy did not yield a profitable outcome.

Understanding this interpretation is crucial for evaluating marketing effectiveness, as it informs decision-makers that strategy adjustments may be necessary to improve future efforts. A negative ROI indicates a loss rather than a gain, directing attention toward where improvements can be made to enhance profitability.