ROI vs ROAS
ROI measures what an investment brought back net of everything it cost, while ROAS looks only at the revenue each shekel of ad spend brings in. Confusing the two makes a marketing channel look more or less profitable than it actually is.
ROI
ROI (return on investment) is a percentage showing what an investment earned net of its cost: the gain from it minus its cost, divided by the cost, times 100.
ROAS
ROAS (return on ad spend) is the revenue an ad campaign brings for each shekel spent on it. It is not profit: a ROAS of 5 can still lose money after costs.
The net return from this investment, as a percentage of what it cost
Revenue generated per shekel of ad spend
(Gain from the investment minus its cost) / cost × 100
Revenue from Ads / Ad Spend
Yes, includes all costs
No, ad spend only
Judging whether an initiative is profitable overall
Judging whether a specific ad campaign is efficient
| What it measures | The net return from this investment, as a percentage of what it cost | Revenue generated per shekel of ad spend |
|---|---|---|
| Formula | (Gain from the investment minus its cost) / cost × 100 | Revenue from Ads / Ad Spend |
| Accounts for costs beyond ads | Yes, includes all costs | No, ad spend only |
| Best used for | Judging whether an initiative is profitable overall | Judging whether a specific ad campaign is efficient |