Skip to main content

ROAS vs ROI in Marketing: What’s the Difference and Why It Matters

 

ROAS vs ROI: What's the Difference?

In digital marketing, ROAS (Return on Ad Spend) and ROI (Return on Investment) are two key metrics used to measure the effectiveness of your campaigns. Although they may sound similar, they serve different purposes.

✅ What is ROAS (Return on Ad Spend)?

Definition:
ROAS tells you how much revenue you earned for every rupee (or dollar) spent on advertising.

Formula:
ROAS = Revenue from Ads / Cost of Ads

Example:
If you spent ₹10,000 on ads and made ₹50,000 in sales:

  • ROAS = 50,000 / 10,000 = 5

  • That means you earned ₹5 for every ₹1 spent on ads.

Use Case:

  • Best for measuring ad performance.

  • Helps optimize campaigns on Google Ads, Facebook Ads, etc.

✅ What is ROI (Return on Investment)?

Definition:
ROI shows how much net profit you made from your overall investment, not just ads.

Formula:
ROI = (Net Profit / Total Investment) × 100

Example:
If you made ₹50,000 in sales, but your total costs (ads, product, staff, shipping) were ₹30,000:

  • Net Profit = ₹20,000

  • ROI = (20,000 / 30,000) × 100 = 66.7%

Use Case:

  • Best for measuring overall profitability.

  • Useful for long-term planning and financial decisions.

🔍 Key Differences

MetricROASROI
FocusAd revenue vs ad costProfit vs total cost
TypeRevenue-basedProfit-based
ScopeNarrow (ad campaigns)Broad (entire business)
UseAd performanceBusiness health & strategy
         🎯 Final Thoughts 

  • Use ROAS to evaluate and tweak your ad campaigns.

  • Use ROI to assess your business profitability as a whole.

Pro Tip: High ROAS doesn’t always mean high ROI. If your other costs are too high, you could still lose money.

Comments

Post a Comment

Popular posts from this blog

"How Paytm Became India’s First Super App"

Paytm's Journey: A Startup That Changed How India Pays"  1. Origin – Mobile Recharge Platform (2010) Founded by Vijay Shekhar Sharma under One97 Communications . Launched in 2010 as a mobile recharge and utility bill payment app . Gained early traction as mobile recharges were a major pain point. 2. Digital Wallet Era (2014) Introduced the Paytm Wallet in 2014. Became widely used for mobile payments, especially for: Prepaid/postpaid recharges Utility bills Online shopping (partnered with Uber, IRCTC, etc.) Trust, convenience, and cashback offers helped mass adoption. 3. Game-Changer – Demonetization (2016) November 2016 : India’s demonetization boosted digital payments. Paytm saw a massive user spike— from ~125 million to over 185 million users within a few months. Promoted itself as the go-to cashless payment option. 4. Diversification – Building the Super App Over the years, Paytm expanded beyond wallet services to be...
Post a Comment
Read more
 Zepto Business Case Study Overview: Zepto is a hyperlocal quick commerce (q-commerce) platform that promises grocery deliveries within 10 minutes. Founded by Aadit Palicha and Kaivalya Vohra in 2021, the company has quickly gained prominence in India’s competitive grocery delivery market, offering a new standard in rapid e-commerce. 1. Problem Identification: Before Zepto’s launch, the Indian grocery delivery market faced a few significant challenges: Slow Delivery Times: Existing platforms like BigBasket and Grofers had delivery times ranging from a few hours to a day, which often led to customer dissatisfaction. Lack of Inventory Control: Many grocery delivery services struggled with the efficiency of product availability, leading to cancelled orders or delayed deliveries. Fragmented Market: There were limited options for customers who needed groceries delivered urgently, leading to untapped demand for faster deliveries. 2. Zepto’s Solution: Zepto solved these problems by offeri...
Post a Comment
Read more

HOW TO CREATE WEB HOSTING

                                                      HOW TO CREATE WEB HOSTING Step 1 : Purchase Hosting Go to your chosen hosting provider (e.g., Bluehost, HostGator, SiteGround) and select a hosting plan. After purchasing, the hosting provider will give you nameservers (usually two or more), which look something like: ns1.bluehost.com                                                                                                                            ns2.bluehost.com                     ...
Post a Comment
Read more