ROAS vs ROI: Formulas, Differences and When to Use Each

The formulas

ROAS = revenue from ads ÷ ad spend

ROI = (revenue − all costs) ÷ all costs × 100

ROAS ignores product costs, fees and staff time. ROI includes them.

ROAS vs ROI calculation example

You spend 1,000 on ads and make 4,000 in sales. Products, shipping and fees cost 2,400.

• ROAS = 4,000 ÷ 1,000 = 4x
• Total costs = 1,000 + 2,400 = 3,400
• ROI = (4,000 − 3,400) ÷ 3,400 × 100 = 17.6%

Same campaign, very different-looking numbers.

When to use each

Use ROAS to compare campaigns, ad sets and creatives day to day, because it comes straight from ad platform data. Use ROI to decide whether marketing is worth it for the business overall.

Connecting the two

The break-even ROAS calculator turns your margin into the minimum ROAS you need for ROI to be zero or above. Calculate ROAS itself with the ROAS calculator.

ROAS vs ROI in digital marketing: which one to use

Use ROAS to compare and optimise ad campaigns day to day, because the ad platform already knows both the spend and the attributed revenue. Use ROI when you decide whether marketing as a whole is making money, because only ROI includes product costs, fees, tools and people's time.

A campaign can show a strong ROAS and still lose money. For example, a 3x ROAS on a product with a 25% margin returns 0.75 of profit for every 1 spent on ads, which is a loss. That is why the break-even ROAS calculator matters: it turns your margin into the minimum ROAS you need.

ROAS vs ROI calculation side by side

Take a month where ads cost 2,000, brought in 8,000 in revenue, and the products sold cost 4,000 to make and ship.

Both numbers are correct; they just answer different questions. Run your own figures through the ROAS calculator and the social media ROI calculator.

ROAS and ROI formula in Excel or Google Sheets

With revenue in cell B2, ad spend in C2 and other costs in D2:

ROAS:  =B2/C2
ROI %: =(B2-C2-D2)/(C2+D2)*100

Format the ROAS cell as a number with one decimal place and add an "x" in a custom format if you want it to read like 4.0x.

Frequently asked questions