Marketing ROI Calculator
Measure the profitability of your marketing campaigns quickly and accurately.
Understanding Marketing Return on Investment
Return on Investment (ROI) is the most critical metric for any business or marketing department. It measures the efficiency of an investment or compares the efficiencies of several different investments. In marketing, it helps you understand if your spend on advertising, content, or social media is actually driving bottom-line growth.
How to Calculate ROI
The standard formula for Marketing ROI is straightforward: Subtract the cost of the marketing campaign from the total revenue generated, then divide that number by the cost of the campaign. Finally, multiply by 100 to get a percentage.
Formula: ((Revenue – Cost) / Cost) x 100
ROI vs. ROAS: What's the Difference?
While often used interchangeably, they measure different things:
- ROI: Takes into account the total cost, including overhead, software, and labor. It tells you the overall profitability.
- ROAS: Only looks at the specific ad spend. It is calculated as Revenue / Ad Spend. It is a "gross" metric that helps measure the effectiveness of specific creative or targeting.
Example Calculation
Imagine you spent $2,000 on a Facebook Ads campaign. This campaign resulted in $10,000 in total sales.
- Net Profit: $10,000 – $2,000 = $8,000
- ROI: ($8,000 / $2,000) x 100 = 400%
- ROAS: $10,000 / $2,000 = 5.0x
In this scenario, for every $1 you spent, you earned $5 in revenue and $4 in profit.
Why Measuring ROI is Vital
Without tracking ROI, marketing is just guessing. By using this calculator, you can identify which channels are your most "profitable" rather than just looking at which ones bring in the most "traffic." This allows for better budget allocation and higher long-term growth.