ROI vs ROAS
ROI measures overall return relative to total investment across a business activity, while ROAS isolates return specifically from ad spend. Confusing the two makes a marketing channel look more or less profitable than it actually is.
ROI
A financial metric used to evaluate the efficiency or profitability of an investment relative to its cost.
ROAS
A metric that measures the amount of revenue your business earns for every dollar spent on advertising.
| What it measures | Net profit as a percentage of total investment | Revenue generated per dollar of ad spend |
|---|---|---|
| Formula | (Net Profit / Cost) x 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 |