Calculate profit margin, net marketing contribution, marketing return on sales (or marketing ROS), and marketing return on investment (or marketing ROI) for each company. Which company is performing better?

Alphabet (Google) and Meta (Facebook) are tech giants. If you compare sales and profits, you would think that Alphabet is a far better marketer than Meta: Alphabet’s sales last year were more than double Meta’s sales, and its profits were 29 percent higher. Sales and profits provide information to compare the profitability of companies, but between these numbers is information regarding the efficiency of the marketing efforts in creating those sales and profits. Appendix 2: Marketing by the Numbers, Marketing Performance Measures, discusses other marketing profitability measures beyond the return on marketing investment (marketing ROI) measure described in this chapter. Review the appendix to answer the questions using the following information from the two companies’ incomes statements (all numbers are in thousands):

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Sales Gross Profit Marketing Expenses Net Income (Profit) Alphabet (2020) Meta (2020) $182,500,000 $84,170,000 $97,790,000 $69,273,000 $22,910,000 $2,260,000 $40,269,000 $29,146,000