ROAS vs ROI: The Quick Answer
Here's the fundamental difference:
ROAS
Revenue-focused
Measures how much revenue you generate for each dollar spent on advertising
ROI
Profit-focused
Measures overall profit percentage after accounting for all costs
💡 In short: ROAS tells you how much money your ads bring in. ROI tells you how much profit you actually keep.
What is ROAS?
ROAS (Return on Ad Spend) measures the revenue generated for every dollar spent on advertising. It's a top-line metric that focuses specifically on ad campaign performance.
ROAS = Revenue from Ads ÷ Ad SpendExample
You spend $2,000 on Facebook Ads and generate $8,000 in sales.
$8,000 ÷ $2,000 = 4.0× ROAS
You earn $4 in revenue for every $1 spent on ads.
Learn more in our What is ROAS guide →
What is ROI?
ROI (Return on Investment) measures the overall profitability of an investment after accounting for ALL costs — not just ad spend, but also product costs, overhead, shipping, etc.
ROI = (Net Profit ÷ Total Investment) × 100%or: ROI = (Revenue - All Costs) ÷ All Costs × 100%
Example
You invest $5,000 total (ads + product costs) and generate $3,000 in profit.
($3,000 ÷ $5,000) × 100% = 60% ROI
You earned 60% return on your total investment.
ROAS vs ROI: Detailed Comparison
The Formulas Side by Side
ROAS
Revenue ÷ Ad SpendROI
(Profit - Cost) ÷ Cost × 100%Key Differences
| Aspect | ROAS | ROI |
|---|---|---|
| Focus | Revenue (top-line) | Profit (bottom-line) |
| Costs Included | Ad spend only | All costs (COGS, overhead, etc.) |
| Output Format | Ratio (4:1) or multiple (4×) | Percentage (300%) |
| Time Frame | Campaign-level | Business/project-level |
| Ease of Calculation | Easy (2 inputs) | Harder (needs all cost data) |
| Used By | Marketing teams | Finance/executives |
What Each Metric Tells You
ROAS: ROAS answers: "For every $1 I spend on ads, how much revenue do I get back?"
ROI: ROI answers: "For every $1 I invest in this business, how much profit do I make?"
When to Use ROAS vs ROI
Use ROAS When:
Optimizing Ad Campaigns
Compare performance across campaigns, ad sets, or creatives
Setting Target ROAS Bidding
Google and Meta use ROAS for automated bidding strategies
Quick Performance Checks
Get a fast read on whether ads are generating revenue
Comparing Channels
See which advertising channels deliver the best revenue per dollar
Use ROI When:
Evaluating Business Profitability
Determine if the overall business or project is profitable
Reporting to Executives/Investors
Finance teams and stakeholders typically want to see ROI
Making Investment Decisions
Decide whether to continue funding a channel or project
Comparing Different Investments
Compare marketing spend vs other business investments
Can You Convert ROAS to ROI?
Technically yes, but it requires additional data. Here's how:
ROI = ((ROAS × Ad Spend) - Total Costs) ÷ Total Costs × 100%Example Conversion
ROAS: 4×, Ad Spend: $2,000, Product Cost: $4,000
1. Revenue = 4 × $2,000 = $8,000
2. Total Costs = $2,000 + $4,000 = $6,000
3. ROI = ($8,000 - $6,000) ÷ $6,000 = 33%
Why Direct Conversion is Tricky
- • ROAS doesn't include product costs (COGS)
- • ROAS ignores overhead and operating expenses
- • Different attribution windows can skew results
- • Returns and refunds may not be accounted for
ROAS vs ROI: Which is Better?
Neither is "better" — they serve different purposes.
| Scenario | Use | Why |
|---|---|---|
| Marketing teams optimizing campaigns | ROAS | Quick feedback on ad performance |
| CFO evaluating marketing spend | ROI | Shows actual profitability |
| Comparing ad channels | ROAS | Apples-to-apples comparison |
| Deciding to scale or cut budget | Both | Need revenue AND profit perspective |
✅ Best practice: Track both metrics. Use ROAS for day-to-day optimization and ROI for strategic decisions.
Common Mistakes
Confusing the Two Metrics
A 4× ROAS is NOT the same as 400% ROI. ROAS doesn't account for product costs.
Always clarify which metric you're discussing.
Using ROAS for Profitability Decisions
High ROAS doesn't guarantee profit. A 5× ROAS with 90% product costs means you're losing money.
Calculate your break-even ROAS based on margins.
Ignoring Hidden Costs in ROI
Only counting ad spend and COGS, forgetting overhead, shipping, returns, etc.
Include ALL costs for accurate ROI.
Comparing Apples to Oranges
Comparing your ROAS to a competitor's ROI, or vice versa.
Compare like metrics only.
Try the ROAS Calculator
Calculate your Return on Ad Spend instantly.
ROAS Calculator
Enter your numbers below
Your ROAS
For every $1 spent, you earn 4 in revenue.
Frequently Asked Questions
Related Resources
What is ROAS?
Complete guide to understanding ROAS
ROAS Formula Guide
Deep dive into the ROAS formula
How to Calculate ROAS
Step-by-step calculation tutorial
ROAS Calculator
Calculate your ROAS instantly
Break-even ROAS Calculator
Find your minimum profitable ROAS