Marketing ROI Calculator
Performance Summary
Return on Investment
Net Profit
ROAS
Cost Ratio
Understanding Marketing ROI (Return on Investment)
Marketing Return on Investment (ROI) is the practice of attributing profit and revenue growth to the impact of marketing initiatives. By calculating ROI, businesses can measure the degree to which their marketing efforts either contribute to or detract from the company's bottom line.
How the ROI Calculation Works
The standard formula for marketing ROI is:
ROI vs. ROAS: What's the Difference?
While they are often used interchangeably, they serve different purposes:
- ROI (Return on Investment): Looks at the big picture. It accounts for all costs including ad spend, software fees, creative labor, and overhead. It tells you if your campaign was profitable.
- ROAS (Return on Ad Spend): Specifically measures the gross revenue generated for every dollar spent specifically on advertising. It is a metric of efficiency for a specific channel.
Example Calculation
Imagine you run a Facebook Ads campaign:
- Ad Spend: $1,000
- Graphic Designer Cost: $200
- Total Revenue Generated: $5,000
In this scenario:
- Total Cost: $1,200
- Net Profit: $3,800 ($5,000 – $1,200)
- ROI: ($3,800 / $1,200) x 100 = 316.67%
- ROAS: $5,000 / $1,000 = 5.0x
What is a Good Marketing ROI?
A "good" ROI depends heavily on your industry and business model. However, a common benchmark for marketing is a 5:1 ratio (500% ROI). A 10:1 ratio is considered exceptional, while anything below 2:1 may indicate that the marketing effort is barely covering its own costs when accounting for business overhead beyond the marketing budget.