Marketing ROI & ROAS Calculator
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Used to calculate True ROI vs ROAS.
Campaign Projections
Est. Traffic (Clicks)
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Est. Conversions (Sales)
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Total Revenue
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ROAS
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Total Cost (Ads + COGS)
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Net Profit
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True ROI
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Understanding Marketing ROI vs. ROAS
When evaluating the success of digital marketing campaigns, two metrics stand out: Return on Ad Spend (ROAS) and Return on Investment (ROI). While often used interchangeably, they measure profitability in very different ways. This calculator helps you determine both to ensure your campaigns are truly profitable.
What is ROAS?
ROAS measures the gross revenue generated for every dollar spent on advertising. It focuses strictly on the efficiency of your ad budget.
Formula: ROAS = Total Revenue / Total Ad Spend
For example, if you spend $5,000 on ads and generate $15,000 in revenue, your ROAS is 3.0 (or 300%). This means for every $1 you put into ads, you get $3 back in revenue.
What is True Marketing ROI?
While ROAS looks good on paper, it ignores the Cost of Goods Sold (COGS). ROI (Return on Investment) accounts for your product margins and the ad spend to show your actual net profit.
Formula: ROI = (Net Profit / Total Cost) × 100
Using the example above, if your product has a 60% profit margin, your COGS is $6,000 (40% of $15,000 revenue). Your total cost is $5,000 (Ads) + $6,000 (COGS) = $11,000. Your Net Profit is $4,000. Therefore, your ROI is roughly 36%.
How to Improve Your Campaign Numbers
- Increase Conversion Rate: Improving your landing page design or offer can lower your Customer Acquisition Cost (CAC) without increasing ad spend.
- Boost AOV: Implement upsells or bundles to increase the Average Order Value. A higher AOV directly improves ROAS.
- Lower CPC: Improve your ad quality scores or target less competitive keywords to reduce the cost per click.
Why is my ROI negative when ROAS is positive?
This is a common pitfall. You can have a positive ROAS (e.g., 2.0) but still lose money if your profit margins are thin. If your product margin is only 30%, you need a ROAS significantly higher than 3.0 just to break even. Use the "Product Profit Margin" field in our calculator to see the difference between revenue generation and actual profit.