ROI vs ROAS: Which Metric Should You Track?

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Metrics7 min readSeptember 20, 2026

ROI vs ROAS: Which Metric Should You Track?

Both measure profitability, but they tell very different stories. Learn when to use each for smarter campaign decisions.

If you run paid advertising, you've probably heard both ROI and ROAS thrown around as measures of success. They're related, but they measure fundamentally different things — and confusing them can lead to very bad decisions about where to invest your budget.

What are they?

ROI (Return on Investment)

ROI = (Net Profit / Total Investment) × 100

The actual profitability of your investment after accounting for all costs — including cost of goods, overhead, and operational expenses. It answers: did this investment make money?

Example: You spend $5,000 on a campaign (including agency fees, creative, and ad spend). You generate $15,000 in revenue with a 60% gross margin, so gross profit = $9,000. Net profit = $9,000 − $5,000 = $4,000. ROI = ($4,000 / $5,000) × 100 = 80%.

ROAS (Return on Ad Spend)

ROAS = Revenue Generated / Ad Spend

How much revenue your ads generate relative to what you spent on the ads themselves — not including other costs. It answers: how efficiently are my ads generating revenue?

Example: You spend $2,000 on Google Ads and generate $10,000 in revenue. ROAS = $10,000 / $2,000 = 5x (or 500%). This means every $1 spent on ads returned $5 in revenue.

Key differences

AspectROIROAS
What costs are includedAll costs: ad spend, COGS, agency fees, creative, overheadAd spend only
What it measuresTrue profitability of the investmentRevenue efficiency of ad spend
Output formatPercentage (%)Multiplier (e.g. 4x) or ratio
Can it be negative?Yes — negative ROI means you lost moneyNo — ROAS is always positive if ads generate any revenue
Best used forBusiness-level profitability decisionsCampaign-level optimisation and bidding

When to use each

ROIDeciding whether a marketing channel is worth continuing

ROI accounts for all costs, so it tells you whether the channel is actually profitable for the business — not just whether ads are generating revenue.

ROIComparing marketing channels against each other

A channel with 3x ROAS might have lower ROI than a channel with 2x ROAS if the first channel has higher COGS or operational costs.

ROASSetting and optimising automated bidding targets in Google Ads or Meta

Ad platforms use ROAS targets for their smart bidding algorithms. Target ROAS is a native bidding strategy in both platforms.

ROASComparing performance across ad campaigns or ad sets

ROAS is a fast, apples-to-apples comparison of how efficiently different campaigns are converting spend into revenue.

Benchmarks

Channel / MetricROIROAS
Google Search Ads2x – 4x4x+

Highly variable by industry; legal and finance keywords can require 8x+ to be profitable

Meta (Facebook/Instagram) Ads2x – 3x3x+

Prospecting campaigns typically lower; retargeting campaigns often 5x+

Google Shopping3x – 6x6x+

E-commerce benchmark; depends heavily on product margins

Email Marketing36x – 42x42x+

Low cost base makes email ROAS very high; ROI is the more meaningful metric here

The bottom line

Use ROAS to optimise your ad campaigns day-to-day. Use ROI to decide whether a channel deserves more budget. A campaign can have excellent ROAS but negative ROI if your margins are thin — which is why you need both.

Try the related tools

Put these metrics into practice with our free calculators.