Nanny Tax Calculator

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Marketing ROI & ROAS Calculator

Campaign Results:

Return on Investment (ROI)

Return on Ad Spend (ROAS)

Net Profit

Efficiency Ratio

function calculateMarketingROI() { var spend = parseFloat(document.getElementById('ad_spend').value); var revenue = parseFloat(document.getElementById('total_revenue').value); var resultBox = document.getElementById('roi_result_box'); if (isNaN(spend) || isNaN(revenue) || spend <= 0) { alert('Please enter valid positive numbers for spend and revenue.'); return; } var profit = revenue – spend; var roi = (profit / spend) * 100; var roas = revenue / spend; var efficiency = revenue / spend; document.getElementById('roi_percentage').innerText = roi.toFixed(2) + '%'; document.getElementById('roas_ratio').innerText = roas.toFixed(2) + 'x'; document.getElementById('net_profit').innerText = '$' + profit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('efficiency_val').innerText = (roas * 100).toFixed(0) + '%'; resultBox.style.display = 'block'; if (roi < 0) { document.getElementById('roi_percentage').style.color = '#d32f2f'; } else { document.getElementById('roi_percentage').style.color = '#2e7d32'; } }

How to Calculate Marketing ROI: A Complete Guide

Return on Investment (ROI) is the most critical metric in digital marketing. It measures the profit or loss generated by your marketing campaigns relative to the amount of money invested. Understanding your ROI allows you to scale winning campaigns and cut spend on underperforming channels.

The ROI Formula

The standard formula for calculating Marketing ROI is:

ROI = [(Total Revenue – Total Spend) / Total Spend] x 100

ROI vs. ROAS: What's the Difference?

While often used interchangeably, ROI and ROAS tell different stories:

  • ROI (Return on Investment): Focuses on net profit. It considers all costs (spend) and tells you if your business is actually making money.
  • ROAS (Return on Ad Spend): Focuses on gross revenue. It measures how effectively your ad creative and targeting are generating sales, regardless of profit margins. Formula: Revenue / Spend.

Example Calculation

Imagine you run a Facebook Ads campaign for an E-commerce store:

  • Ad Spend: $2,000
  • Revenue Generated: $8,000
  • Profit: $6,000
  • ROI: ($6,000 / $2,000) x 100 = 300%
  • ROAS: $8,000 / $2,000 = 4.0x

In this scenario, for every $1 you spent, you generated $4 in revenue and $3 in net profit.

What is a "Good" Marketing ROI?

A "good" ROI varies significantly by industry, but a common benchmark for digital marketing is a 5:1 ratio (meaning $5 in revenue for every $1 spent). A 10:1 ratio is considered exceptional, while a 2:1 ratio is often the "break-even" point when you factor in cost of goods sold (COGS) and overhead.

Factors That Impact Your ROI

  1. Cost of Goods Sold (COGS): If your margins are thin, you need a much higher ROI to remain profitable.
  2. Attribution Window: Some customers may see an ad today but not buy for 30 days. Your tracking must account for this delay.
  3. Customer Lifetime Value (CLV): A low initial ROI might be acceptable if the customer returns to buy multiple times over the year.

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