Digital Marketing ROI & ROAS Calculator
Measure the profitability of your advertising campaigns accurately.
Campaign Results
ROI
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ROAS
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Net Profit
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Please enter valid positive numbers for Ad Spend and Revenue.
Understanding Digital Marketing ROI and ROAS
In the world of digital advertising, measuring the effectiveness of your spend is the difference between scaling a business and burning through capital. Two primary metrics define success: ROI (Return on Investment) and ROAS (Return on Ad Spend).
ROI vs. ROAS: What is the Difference?
While they sound similar, they serve different purposes:
- ROAS: Measures gross revenue generated for every dollar spent specifically on advertising. It is a measure of efficiency. (Formula: Revenue / Ad Spend)
- ROI: Measures the total profit generated after accounting for ALL costs, including ad spend, product manufacturing, shipping, and software. It is a measure of profitability. (Formula: [Net Profit / Total Cost] x 100)
A Realistic Example
Imagine you run a Facebook Ads campaign for an e-commerce store:
- Ad Spend: $1,000
- Total Revenue: $5,000
- Cost of Goods (COGS): $2,000
The Math:
- ROAS: $5,000 / $1,000 = 5.0x
- Total Costs: $1,000 (Ads) + $2,000 (COGS) = $3,000
- Net Profit: $5,000 – $3,000 = $2,000
- ROI: ($2,000 / $3,000) * 100 = 66.67%
How to Improve Your Marketing ROI
If your ROI is lower than expected, consider these three levers:
- Conversion Rate Optimization (CRO): Improve your landing page to ensure more visitors become customers without increasing your ad spend.
- Lowering COGS: Negotiate better rates with suppliers to increase your profit margin per unit sold.
- Targeting Refinement: Use data to exclude low-performing demographics or interests, increasing your ROAS.