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Glossary

Marketing ROI

Marketing ROI is the profit your marketing earns after its cost, shown as a percentage of that cost.

By Berend Vrakking, founder of Product Metrics. Updated 7 October 2026.

Formula

ROI = (profit − marketing cost) ÷ marketing cost

Count profit before ad spend, after costs such as product cost, shipping, fees and returns. Then ROI = POAS − 1, so break-even ROI is 0% and break-even POAS is 1.

Example

One month of ads, three ratios
StepValue
Revenue from ads€20,000.00
Profit before ad spend€6,000.00
Ad spend€4,000.00
ROAS (€20,000.00 ÷ €4,000.00)5
POAS (€6,000.00 ÷ €4,000.00)1.5
Profit after ad spend (€6,000.00 − €4,000.00)€2,000.00
ROI (€2,000.00 ÷ €4,000.00)0.5, or 50%

A ROAS of 5 sounds large, but after costs the ads kept €0.50 of profit for every €1.00 spent: an ROI of 50%, which is a POAS of 1.5 minus 1. Illustrative data.

For one product, and for an account

ROI depends on margin, so it differs by product. At the same ROAS of 4, a product with a 25% margin has a POAS of 1 and an ROI of 0%, and a product with a 50% margin has a POAS of 2 and an ROI of 100%.

Put both into one account ROI and the 0% product hides behind the 100% one. Product Metrics reports ROAS from the start and POAS once margins are connected; with profit counted the same way, POAS and ROI rank products in the same order.

Common mistake

Calling revenue divided by ad spend ‘ROI’ in a report. That is ROAS with a promotion it has not earned: it leaves out what the products cost, so a high number can still be a loss.

Questions

How is marketing ROI calculated?

Subtract the marketing cost from the profit it earned, then divide by the marketing cost. Profit of €6,000.00 before ad spend and ad spend of €4,000.00 give (€6,000.00 − €4,000.00) ÷ €4,000.00 = 0.5, or 50%.

What does a 20% ROI mean?

Every €1.00 spent on marketing came back with €0.20 of profit on top, after paying for the marketing itself. When profit is counted before ad spend, a 20% ROI is a POAS of 1.2. An ROI of 0% is break-even.

What is the difference between ROI and ROAS?

ROAS divides revenue by ad spend and ignores costs. ROI divides profit after the marketing cost by that cost, so the same month of ads can post a ROAS of 5 and an ROI of 50%.

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