{"id":84441,"date":"2023-08-04T09:45:59","date_gmt":"2023-08-04T15:45:59","guid":{"rendered":"https:\/\/www.vendasta.com\/blog\/?p=84441"},"modified":"2026-08-31T22:48:04","modified_gmt":"2026-08-31T22:48:04","slug":"roas-vs-roi","status":"publish","type":"post","link":"https:\/\/www.vendasta.com\/blog\/roas-vs-roi\/","title":{"rendered":"Understanding ROAS vs. ROI: Which One Matters the Most to Your Clients?"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.21.0&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_row _builder_version=&#8221;4.21.0&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;4.21.0&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_text admin_label=&#8221;Introduction&#8221; _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; hover_enabled=&#8221;0&#8243; global_colors_info=&#8221;{}&#8221; sticky_enabled=&#8221;0&#8243;]<\/p>\n<p style=\"text-align: justify;\">Pay-per-click (PPC) advertising serves up plenty of data to help track and assess the effectiveness of your <a href=\"\/ads\/#campaign-management\" target=\"_blank\" rel=\"noopener\">digital ad services<\/a>. You can use this information to determine return on ad spend (ROAS) and return on investment (ROI) and get insights into performance\u2014 our downloadable <a href=\"\/content-library\/tools\/roi-calculator\/\">ROI calculator<\/a> will run both once you have the numbers.<\/p>\n<p style=\"text-align: justify;\">Although the two metrics sound similar, they\u2019re not interchangeable. It\u2019s critical to understand ROAS vs ROI as distinct advertising benchmarks, so you can use the most relevant one to help clients track progress toward their goals. Both metrics ultimately answer the same question: is your ad spend <a href=\"\/get-customers\/\">winning customers<\/a> profitably?<\/p>\n<p><span style=\"font-weight: 400;\">[et_pb_section global_module=\"112902 \"][\/et_pb_section]<\/span><\/p>\n<p>[\/et_pb_text][et_pb_text admin_label=&#8221;What is the difference between ROI and ROAS?&#8221; _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2 id=\"what\">What is the difference between ROI and ROAS?<\/h2>\n<p style=\"text-align: justify;\">We\u2019ll dig into the details below, but let\u2019s lay the groundwork first. Here are the basic differences between ROAS and ROI:<\/p>\n<ul style=\"text-align: justify;\">\n<li>ROAS is a campaign-specific metric that looks at the return per advertising dollar spent.<\/li>\n<li>ROI is a profitability metric that considers net income after deducting marketing expenses such as advertising placement, salaries, software, and agency fees.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">You\u2019re not alone if ROI and ROAS are thorns in your marketing side. According to one study, 17 percent of marketers find ROAS difficult to prove and 34 percent feel that it\u2019s hard to demonstrate ROI (<a href=\"https:\/\/www.ruleranalytics.com\/blog\/insight\/marketing-challenges\/\" target=\"_blank\" rel=\"noopener\">Ruler Analytics<\/a>).<\/p>\n<p style=\"text-align: justify;\">The below table offers a side-by-side comparison of the two metrics, including quick ROI vs <a href=\"\/blog\/roas-calculation\/\" target=\"_blank\" rel=\"noopener\">ROAS calculations<\/a>.<\/p>\n<table>\n<tbody>\n<tr>\n<td>\u00a0<\/td>\n<td><strong>ROAS<\/strong><\/td>\n<td><strong>ROI<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>What it is<\/strong><\/td>\n<td>Sales generated per advertising dollar spent<\/td>\n<td>Net income per marketing dollar spent<\/td>\n<\/tr>\n<tr>\n<td><strong>How it\u2019s calculated<\/strong><\/td>\n<td>Total revenue from an ad campaign divided by cost of media placement<\/td>\n<td>Net income (revenue less expenses) divided by marketing expenses<\/td>\n<\/tr>\n<tr>\n<td><strong>How revenue is considered<\/strong><\/td>\n<td>Uses the total revenue generated by the ad campaign<\/td>\n<td>Uses the amount of revenue after marketing expenses and other costs are deducted<\/td>\n<\/tr>\n<tr>\n<td><strong>Types of expenses considered<\/strong><\/td>\n<td>Uses cost of media placement only<\/td>\n<td>Uses cost of media placement and other marketing expenses such as labor, agency fees, platform subscriptions, and technology costs<\/td>\n<\/tr>\n<tr>\n<td><strong>What it tells you<\/strong><\/td>\n<td>How much your campaign generated compared to the amount paid for placing the campaign<\/td>\n<td>How much your campaign generated as profit compared to the amount paid to manage, create, and run the campaign<\/td>\n<\/tr>\n<tr>\n<td><strong>How to use the insights<\/strong><\/td>\n<td>To evaluate the efficiency of a PPC campaign<\/td>\n<td>To evaluate the profitability of your overall marketing spend<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p style=\"text-align: justify;\">The bottom line? ROAS is used to measure whether you make more money than you spent placing the ad (and how much more). ROI indicates overall profitability once you\u2019ve paid for your marketing costs.<\/p>\n<h3 id=\"example\">Example of ROAS vs ROI<\/h3>\n<p style=\"text-align: justify;\">Let\u2019s say it cost $15,000 to run a paid social media campaign that generates $75,000 in sales. You can report to your client that the return on ad spend (revenue divided by ad spend) is $5 for every $1 spent, or a return of 500 percent.<\/p>\n<p style=\"text-align: justify;\">However, you incurred expenses beyond the money paid to place the advertisements. It cost an additional $15,000 in labor and production to produce the slick video that captured your audience&#8217;s attention, as well as design a high-converting landing page. Now your return on investment ($75,000 in revenue less $30,000 in expenses divided by $30,000 in expenses) is $1.50 for every $1 spent, or 150 percent. You\u2019re still making more than you spent, but the profitability of the promotion as shown by ROI vs ROAS is much more modest.<\/p>\n<h3 id=\"use\">Use cases for ROAS<\/h3>\n<p style=\"text-align: justify;\">Return on ad spend compares the revenue generated from a PPC promotion to the amount spent to place the ads on platforms such as Google, <a href=\"\/blog\/good-roas-facebook-ads\/\" target=\"_blank\" rel=\"noopener\">Facebook<\/a>, LinkedIn, YouTube, and Instagram. This can be useful for assessing whether the sales you generate on a particular platform make the cost of that platform worth it.<\/p>\n<p style=\"text-align: justify;\">To easily calculate ROAS when using multiple platforms, use a reporting tool such as Advertising Intelligence to track spending and conversions by channel. You can customize reports and determine:<\/p>\n<ul style=\"text-align: justify;\">\n<li>Which platform provides the highest return per media dollar spent. Your client may decide to direct more budget to a platform because of the qualified audience it reaches, or consider another avenue if a platform is showing consistently low ROAS compared to other ones.<\/li>\n<li>Which platform may be underperforming for a particular promotion compared to past results. You may need to adjust the messaging or refine your strategy to better reach your audience.<\/li>\n<li>How well you\u2019re maintaining ROAS, especially as you spend more money and scale your campaigns.<\/li>\n<\/ul>\n<h4 id=\"other\">Other marketing considerations<\/h4>\n<p style=\"text-align: justify;\">One of the difficulties of measuring marketing performance is that it\u2019s hard to pinpoint the reason for success. While return on ad spend can give you an immediate measure of how well your campaign is reaching target audiences, your success can also be due to consumer confidence in your brand that your marketing has built up over time. It could also be because of the relationships you&#8217;ve established with followers in social media through your engagement efforts.<\/p>\n<p style=\"text-align: justify;\">Efforts to improve search engine rankings, for example, may help to build awareness of your client\u2019s brand, making conversions easier. Or, the time you&#8217;ve invested in building online reviews may be motivating consumers to take the final step and make a purchase. It\u2019s always useful to help your clients understand that key tactics such as social media marketing or local SEO can support PPC and help boost performance further.<\/p>\n<h3 id=\"cases\">Use cases for ROI<\/h3>\n<p style=\"text-align: justify;\">Return on investment compares the net income generated from a campaign to total marketing expenditure, giving you a broader measure of efficiency. Considering more than media placement costs helps you assess the profitability of a campaign, as you\u2019ll also pay for labor (writers, designers, programmers, videographers), technology (keyword tools, PPC management software, platform subscriptions), and management (agencies or contractors).<\/p>\n<p style=\"text-align: justify;\">ROI is useful for assessing the impact of advertising efforts on a company\u2019s growth, including:<\/p>\n<ul style=\"text-align: justify;\">\n<li>Whether the marketing funds required to generate sales are being used efficiently<\/li>\n<li>Whether overall expenses are too high for the amount of profit generated<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">If a company\u2019s return on investment is consistently low, your client may decide to streamline their expenditures to generate better profitability. It may be more cost-effective, for example, for them to choose an agency that bundles PPC and SEO rather than using separate providers.<\/p>\n<p>[\/et_pb_text][et_pb_text admin_label=&#8221;ROAS vs. ROI: Which metric is better for your clients?&#8221; _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2 id=\"which\">ROAS vs. ROI: Which metric is better for your clients?<\/h2>\n<p style=\"text-align: justify\">Both ROAS and ROI are valid metrics for gauging performance based on the amount spent. But which should you use when reporting to your client?<\/p>\n<p style=\"text-align: justify\">Well, it depends on your client\u2019s goals. Use return on ad spend to look at the immediate impact of a campaign in terms of how well it\u2019s reaching and converting customers and whether a channel is performing well. Conversely, return on investment tells you more about how the overall costs of implementing PPC as a marketing channel are impacting a company\u2019s ability to turn a profit and grow. Along with metrics such as impressions and clicks, both ROI and ROAS can be used to identify strengths and weaknesses in a client\u2019s marketing efforts, so you can work on improving both over time.<\/p>\n<p>[\/et_pb_text][et_pb_text admin_label=&#8221;Factors to consider when choosing between return on ad spend vs. ROI&#8221; _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2 id=\"factors\">Factors to consider when choosing between return on ad spend vs. ROI<\/h2>\n<p style=\"text-align: justify;\">Although reporting comes at the end of a promotion, it\u2019s important that it\u2019s not an afterthought. Plan ahead of time and choose the metrics that provide the most meaningful insight to your clients to help guide their business growth.<\/p>\n<p style=\"text-align: justify;\">Clients expect concrete evidence that their carefully allocated marketing budget is making a difference to their bottom line. Consider some of the below factors when determining your analytics approach to ensure you\u2019re collecting the right data before the campaign launches. If you don\u2019t have the staff resources to manage this process, <a href=\"\/blog\/white-label-ppc\/\" target=\"_blank\" rel=\"noopener\">white-label PPC<\/a> can help you expertly fulfill your clients\u2019 digital ad and reporting needs.<\/p>\n<h3 id=\"client\">Client objectives<\/h3>\n<p style=\"text-align: justify;\">Start by asking your client what outcome they want to see from their campaign and how it fits into their broader digital marketing planning. Then, match the metrics to their goals and determine whether return on ad spend or return on investment provides the most helpful data for meeting their objectives.<\/p>\n<p style=\"text-align: justify;\">A startup that\u2019s just starting to build an audience may concentrate on budget-friendly marketing tactics and using pay-per-click to drive traffic to their landing pages to accelerate conversions. In this case, ROAS can pinpoint which platforms are providing the best results for their budget so they can focus their spending.<\/p>\n<p style=\"text-align: justify;\">A company interested in a steady pace of growth may want to build a long-term marketing strategy which may make ROI\u2014which considers marketing costs\u2014a more relevant measurement.<\/p>\n<h3 id=\"focus\">Campaign focus<\/h3>\n<p style=\"text-align: justify;\">Once you\u2019ve determined a client\u2019s overall goals, look at the complexity of the ads you\u2019re running. Use the metric that\u2019s going to help the client evaluate success based on the campaign scope.<\/p>\n<p style=\"text-align: justify;\">Maybe your agency is helping the client to raise awareness of their latest product, launching a broad-reaching promotion on multiple platforms and with new creatives. Conversely, you might be placing a tried-and-true retargeting ad that\u2019s consistently demonstrated success at converting users.<\/p>\n<p style=\"text-align: justify;\">Return on ad spend can be a helpful metric for tracking the efficiency of the promotion itself, assessing how the different platforms and components are working so you can decide where to increase ad spend. Or, your client may be more interested in return on investment and whether the strategy is profitable after all costs have been deducted.<\/p>\n<h3 id=\"cost\">Cost structure<\/h3>\n<p style=\"text-align: justify;\">Cost is another factor to consider when deciding between ROAS and ROI. The number of expenditures associated with a campaign typically increases with scope and complexity.<\/p>\n<p style=\"text-align: justify;\">If you\u2019re <a href=\"\/blog\/white-label-google-ads-management\/\" target=\"_blank\" rel=\"noopener\">managing Google Ads<\/a> for a client, and are using a text-based ad to drive traffic to an existing product page, your costs are likely limited to the actual media placement spend. In this case, return on ad spend may be enough to tell you if you\u2019re generating a reasonable return.<\/p>\n<p style=\"text-align: justify;\">However, if you\u2019re incurring graphic design, copywriting, and website design costs to create a landing page, or have production costs for a YouTube commercial, you\u2019ll want to consider those expenditures on top of your media placement expenses. In this situation, return on investment is a useful metric as it takes into account the total costs required to execute the strategy, impacting profitability.<\/p>\n<h3 id=\"preference\">Client preference<\/h3>\n<p style=\"text-align: justify;\">Don\u2019t forget to consult your clients when building analytics into your PPC campaign. While your clients are relying on you for your recommendations and expertise in <a href=\"\/blog\/white-label-ppc\/\" target=\"_blank\" rel=\"noopener\">providing PPC management<\/a>, the growth of your agency relies on their satisfaction with your services.<\/p>\n<p style=\"text-align: justify;\">Ask your clients what metrics fit best into their decision-making processes or support their business objectives. They may need certain data for reporting based on their industry vertical, or have internal reporting requirements for justifying their budget and activities to executives.<\/p>\n<p style=\"text-align: justify;\">Some clients may also have a specific formula for calculating ROI, such as deducting the cost of producing the goods from the revenue to more clearly get a picture of profitability. Just make sure any calculations you provide are consistent so that you can help them accurately compare performance over time.<\/p>\n<p>[\/et_pb_text][et_pb_text admin_label=&#8221;Measuring ad performance with both ROAS and ROI&#8221; _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2 id=\"roi\">Measuring ad performance with both ROAS and ROI<\/h2>\n<p style=\"text-align: justify;\">So far we\u2019ve been discussing ROAS and ROI as separate measurements, but you don\u2019t have to choose between one or the other. They can be used together to provide a well-rounded view of the impact of a strategy and how well your marketing efforts are balancing revenue and expenditure.<\/p>\n<p style=\"text-align: justify;\">Almost all clients will be interested in ROAS. Return on ad spend gives you a look at the immediate impact of an ad and can be easily calculated with basic data: value of conversions and the amount spent for media placement.<\/p>\n<p style=\"text-align: justify;\">However, clients typically have expenditures beyond the ad spend, so many will also find ROI useful for an overall look at the effects of their marketing dollars. You\u2019ll likely require additional data from the client to help them calculate ROI unless you\u2019re <a href=\"\/blog\/msp-vendasta-white-label-ppc\/\" target=\"_blank\" rel=\"noopener\">delivering PPC with other services<\/a> and have access to all of their marketing expenses.<\/p>\n<h3 id=\"data\">Providing meaningful data<\/h3>\n<p style=\"text-align: justify;\">In addition to ROAS and ROI, you can report on metrics such as impressions and cost-per-click to help businesses assess the health of their marketing strategies and ensure their budgets are spent wisely for the best possible outcomes. Because there are so many elements involved in building an online presence, additional data points give context to performance and provide clients the ability to look at a strategy on a granular level.<\/p>\n<p style=\"text-align: justify;\">Be careful not to inundate your client with data that doesn\u2019t align with their objectives\u2014more statistics aren\u2019t always better. Be selective and choose the ones that provide relevant insight and can help fine-tune their efforts to reach their target audience and inspire them to convert.<\/p>\n<p style=\"text-align: justify;\">You can also contextualize the metrics in terms of the campaign\u2019s goals. For example, if you\u2019re targeting customers at the top of the funnel to build awareness, you won\u2019t have as many conversions and a lower ROAS and ROI than if you\u2019re trying to reach those that are closer to the decision-making stage.<\/p>\n<p>[\/et_pb_text][et_pb_text admin_label=&#8221;Frequently asked questions&#8221; _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2 data-start=\"0\" data-end=\"9\">FAQs<\/h2>\n<h3 data-start=\"11\" data-end=\"64\">1. What is the difference between ROAS and ROI?<\/h3>\n<p data-start=\"65\" data-end=\"338\"><strong data-start=\"65\" data-end=\"94\">ROAS (Return on Ad Spend)<\/strong> measures revenue generated for every dollar spent on advertising, while <strong data-start=\"167\" data-end=\"197\">ROI (Return on Investment)<\/strong> measures overall profitability after all costs. Simply put, ROAS focuses on ad performance, and ROI assesses total business profitability.<\/p>\n<h3 data-start=\"340\" data-end=\"372\">2. How is ROAS calculated?<\/h3>\n<p data-start=\"373\" data-end=\"589\">ROAS is calculated by dividing <strong data-start=\"404\" data-end=\"442\">revenue from ads by total ad spend<\/strong>.<br data-start=\"443\" data-end=\"446\" \/>For example, if you spend $1,000 on ads and earn $5,000 in sales, your ROAS is <strong data-start=\"525\" data-end=\"532\">5:1<\/strong>\u2014meaning you earn $5 for every $1 spent on advertising.<\/p>\n<h3 data-start=\"591\" data-end=\"622\">3. How is ROI calculated?<\/h3>\n<p data-start=\"623\" data-end=\"838\">ROI considers total expenses, not just ad costs. The formula is <strong data-start=\"687\" data-end=\"728\">(Net Profit \u00f7 Total Investment) \u00d7 100<\/strong>. ROI gives a complete view of profitability after accounting for production, labor, and marketing expenses.<\/p>\n<h3 data-start=\"840\" data-end=\"892\">4. Why is understanding ROAS vs ROI important?<\/h3>\n<p data-start=\"893\" data-end=\"1099\">Knowing both helps marketers make smarter budget decisions. ROAS tells you how efficient your advertising is, while ROI reveals whether the entire campaign is profitable after all expenses are considered.<\/p>\n<h3 data-start=\"1101\" data-end=\"1154\">5. What is a good ROAS for digital advertising?<\/h3>\n<p data-start=\"1155\" data-end=\"1323\">A <strong data-start=\"1157\" data-end=\"1182\">ROAS of 4:1 or higher<\/strong> is generally considered strong, meaning you earn $4 for every $1 spent. However, ideal ROAS varies by industry, goals, and profit margins.<\/p>\n<h3 data-start=\"1325\" data-end=\"1378\">6. Can a campaign have a high ROAS but low ROI?<\/h3>\n<p data-start=\"1379\" data-end=\"1586\">Yes. A campaign can generate high revenue relative to ad spend (strong ROAS) but still have low ROI if product costs, overhead, or fulfillment expenses are high. Evaluating both ensures true profitability.<\/p>\n<h3 data-start=\"1588\" data-end=\"1631\">7. How can I improve my ROAS and ROI?<\/h3>\n<p data-start=\"1632\" data-end=\"1888\">Refine audience targeting, optimize creatives, and focus on high-performing channels. Vendasta\u2019s <strong data-start=\"1729\" data-end=\"1762\">digital advertising solutions<\/strong> use AI and automation to maximize ROAS and track ROI across campaigns, helping agencies deliver better results for clients.<\/p>\n<h3 data-start=\"1890\" data-end=\"1945\">8. How do attribution models impact ROAS and ROI?<\/h3>\n<p data-start=\"1946\" data-end=\"2155\">Attribution models determine which touchpoints get credit for conversions. Accurate tracking ensures you understand which ads drive real revenue\u2014improving your ability to optimize spend and measure true ROI.<\/p>\n<h3 data-start=\"2157\" data-end=\"2211\">9. Which metric should I prioritize\u2014ROAS or ROI?<\/h3>\n<p data-start=\"2212\" data-end=\"2412\">It depends on your goals. Use <strong data-start=\"2242\" data-end=\"2250\">ROAS<\/strong> to assess ad channel efficiency and <strong data-start=\"2287\" data-end=\"2294\">ROI<\/strong> to evaluate overall profitability. For agencies, balancing both ensures sustainable growth and client satisfaction.<\/p>\n<h3 data-start=\"2414\" data-end=\"2475\">10. How does Vendasta help agencies track ROAS and ROI?<\/h3>\n<p data-start=\"2476\" data-end=\"2725\" data-is-last-node=\"\" data-is-only-node=\"\">Vendasta\u2019s <strong data-start=\"2487\" data-end=\"2523\">white-label advertising platform<\/strong> provides unified campaign analytics, showing revenue, ad spend, and profit margins in one dashboard. Agencies can easily measure, report, and optimize both ROAS and ROI to drive better client outcomes.<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How much of a return are your PPC ads generating? Learn the differences between ROAS vs ROI and the best scenarios for using each metric.<\/p>\n","protected":false},"author":103,"featured_media":122641,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[48],"tags":[133],"silo":[3036],"class_list":["post-84441","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing","tag-digital-advertising"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.3 (Yoast SEO v28.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Understanding ROAS vs. ROI: Which One Matters the Most?<\/title>\n<meta name=\"description\" content=\"How much of a return are your PPC ads generating? 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