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.

What about ROI? How do I calculate that?

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%.

Are there any scenarios where one is more useful than the other?

Yes, ROAS is particularly useful for evaluating the effectiveness of advertising campaigns, while ROI gives a broader view of overall investment performance.