What is the difference between ROAS and ROI?

What is the difference between ROAS and ROI?

ROAS stands for Return on Ad Spend, while ROI means Return on Investment. ROAS focuses specifically on revenue generated from advertising, whereas ROI measures the overall profitability of an investment.

Can you give me an example of how to calculate ROAS?

Sure! If you spent $1,000 on ads and generated $5,000 in revenue, your ROAS would be calculated as $5,000 divided by $1,000, which equals 5. This means you earned $5 for every $1 spent on ads.

What about ROI? How is that calculated?

To calculate ROI, you take the net profit from your investment, subtract the cost of the investment, and then divide by the cost of the investment. For example, if you made $4,000 in profit from a $1,000 investment, your ROI would be ($4,000 - $1,000) / $1,000 = 3, or 300%.

Which metric should I focus on for my marketing campaigns?

It depends on your goals. If you're primarily focused on the effectiveness of your ad spend, ROAS is key. If you're looking at overall profitability, then ROI is more relevant.