Compare the return on every marketing channel side by side: ROAS, profit after spend and ROI, based on your real gross margin.
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ROI vs ROAS
| Metric | Formula | Tells you |
|---|---|---|
| ROAS | Revenue ÷ spend | How much revenue each £1 brings in |
| Marketing ROI | (Revenue × margin − spend) ÷ spend | Whether the spend made a profit |
| Break-even ROAS | 1 ÷ margin | The ROAS you need just to cover costs |
Worked example (50% margin)
| Channel | Spend | Revenue | ROAS | Profit after spend | ROI |
|---|---|---|---|---|---|
| Google Ads | £2,000 | £7,500 | 3.75 | £1,750 | 88% |
| Meta Ads | £1,500 | £4,200 | 2.80 | £600 | 40% |
| £300 | £2,600 | 8.67 | £1,000 | 333% | |
| Total | £3,800 | £14,300 | 3.76 | £3,350 | 88% |
A channel can have a high ROAS but still lose money if your margins are thin, which is why ROI uses gross margin.
Making the numbers fair
- Use the same date range and attribution window for every channel.
- Include agency fees, tools and content costs in spend if you can.
- Remember that some channels, like social or video, help sales that get credited to search or email.
Frequently asked questions
How do you calculate marketing ROI?
Take revenue × gross margin, subtract marketing spend, then divide by marketing spend.
What is a good marketing ROI?
Anything above 0% is profitable. Many businesses aim for 5:1 revenue to spend, but it depends on margins.
What's the difference between ROI and ROAS?
ROAS compares revenue with spend; ROI compares profit with spend.
Should I include staff costs?
For a full picture, yes. For comparing channels, ad spend alone is fine if you’re consistent.
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