In the world of digital marketing, we have several ROI metrics that help us know how much we are earning with respect to what we have invested . Understanding well what the return on investment is for each advertising channel, or for each strategy, is vital to be able to optimize and also scale our business.

The idea of ​​“I have invested X and have invoiced 3X” has become obsolete

since concepts such as recurrence, net margin, shipping qatar mobile number list costs, etc., often make these metrics misleading.

We leave you with the most commonly used ROI metrics, their explanation, as well as our interpretation of them:

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ROI or Return Of Investment
The Return on Investment measures the profitability of our actions. If the number is positive, it means that we will be generating profits.

Therefore, the objective of ROI is to evaluate the chosen strategies and change them if they do not give the expected result.

The ROI formula is as follows:

ROI = [(Income – Investment) / Investment] x 100

For example, if the investment was €1,600 and sales were €2,000, our ROI is 25% for each euro invested. If the result were negative, we would be losing money.

Therefore, ROI becomes a key metric for the evaluation, comparison and measurement of actions since it gives us the real performance after executing an investment.

ROAS or Return On Ad Spend
The Return on Investment in Advertising or Return On Ad Spend answers the question of how much money is recovered for each euro invested?

Its formula is as follows

ROAS = (Revenue / Investment) x 100

Let’s see this with an example within Google Sad Life Box Ads . If the cost of the campaign was €2,000 and we obtained sales of €8,000 (ROAS = 8,000 / 2,000) it gives a result of 4 (or 400%). What this means is that for every euro invested, you generate €4.

 

Difference between ROI and ROAS
Both ROI metrics calculate profitability within pay-per-click campaigns , however, it should be noted that both provide different, but equally useful data for calculating ROI. An important point to keep in mind is that ROI operates with the expenses and profits of offline and online channels , while ROAS operates only with one marketing channel. In addition, ROI can measure everything from one-off actions to the total profitability of the business.

ACOS or Advertising Costs of Sales

ACOS = Advertising investment / Sales generated by advertising

As you can see, ACOS is the inverse calculation of ROI and ROAS.

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