ROI and ROAS are both marketing efficiency metrics — but they measure different things and lead to different decisions.
ROAS: Revenue on Ad Spend
ROAS = Revenue Attributed to Ads / Ad Spend
ROAS of 4.0 means: $4 of revenue for every $1 of ad spend.
ROAS ignores costs other than ad spend. A campaign with 5.0 ROAS sounds great — but if product margin is 20%, you're breaking even.
ROI: Net Return on Investment
ROI = (Revenue − All Costs) / Investment × 100
ROI includes COGS, fulfillment, staff time, and the investment itself.
A campaign with 5.0 ROAS and 20% product margin + 15% fulfillment cost: - Net margin = 20% − 15% = 5% - Revenue: $500k. Net from product: $25k. - Ad spend: $100k. - ROI = ($25k − $100k) / $100k = −75%
The same campaign that looked great at 5.0 ROAS is actually destroying value.
When to use each
- ROAS: Optimizing individual ad campaigns, A/B testing creative
- ROI: Strategic investment decisions, comparing channels, budget allocation
Use ROAS for tactical optimization. Use ROI for strategic decisions.
Calculate your ROI at the ROI Calculator.