What is ROI?
ROI (Return on Investment) measures net return relative to total investment. In marketing, it's the profit generated from campaigns after all relevant costs—not just media—divided by those costs.
Understanding ROI
ROI is the board-level metric: did our spend produce net gains? For performance teams, ROI connects channel results to actual business impact. It’s broader than ROAS (revenue/ad spend) and stricter than CPA because it accounts for margin and operating costs. Use ROI to evaluate whether growth is healthy, not just fast, and to prioritize channels with real contribution. Keep definitions stable so comparisons remain meaningful over time.
Treat ROI as your North Star for quarterly planning. In-platform metrics can spike for the wrong reasons—ROI keeps decisions grounded in contribution to the business. Read ROI alongside payback window to protect cash flow. Segment ROI by product category and campaign to avoid blended averages hiding issues. Include creative and tooling costs so math reflects reality. Tie ROI movements back to feed and creative changes for actionable learning.
Why ROI matters for your business
Revenue can grow while profit shrinks. ROI protects you from scaling unprofitable tactics and helps you prioritize high-quality demand over cheap clicks.
- Clarity: Aligns growth decisions with real financial value.
- Comparability: Lets you compare channels, campaigns, and quarters on the same footing.
- Discipline: Forces better product mix, promo strategy, and creative efficiency.
How ROI works
ROI works by comparing net profit from marketing to the total marketing investment over a defined period. Start by keeping your cost stack honest and consistent across channels so comparisons are real. Calculate net profit as attributed revenue minus COGS, variable costs, media, creative/content, and tools/agency fees. Then compute ROI as Net Profit divided by Marketing Investment to get a comparable rate. Read ROI alongside payback windows to protect cash flow and inform pacing. Segment by channel and product category to find where feed and creative changes create durable gains.
Key Takeaways
- ROI is net return, not just revenue efficiency.
- Strong feeds and intent-driven creative lift ROI by improving conversion quality.
- Track ROI by category and campaign; include all material costs.
