Digital marketing term
ROI
Return on investment: (revenue minus cost) divided by cost. It says whether the spend paid back, in a unit you can compare across channels — if the revenue and cost definitions stay honest.
Detailed explanation
The formula is (revenue − cost) / cost, often shown as a percentage. Spend 1,000 and attribute 1,400 in revenue, and the return is 40%. It is not the same as ROAS, which is usually revenue / ad spend without subtracting cost in the same way.
The fight is always definitions: which revenue is credited, which costs count (media only versus creative and people), and which attribution window. Mixing last-click ads with branded organic inflates the figure. Vanity revenue with unpaid invoices is not a return.
Use it to keep or cut a channel, not to crown a single campaign in isolation. Pair it with payback time and volume. A 200% return on a tiny spend can lose to a 40% engine you can actually scale.
Frequently asked questions
- How is this different from ROAS?
- ROI subtracts cost from return, then divides by cost. ROAS is typically revenue divided by ad spend. A good ROAS can still be a poor ROI once other costs sit in.
- What belongs in cost?
- At least media. For a true return, add creative, tools, and people time. State the formula in the report so nobody mixes definitions.
Related terms
Internal links for the topic cluster — read these concepts together.
- Profit MarginProfit Margin is a core financial performance indicator that shows the percentage of a business's total revenue that becomes actual profit, revealing how much of sales converts into real earnings.
- Breakeven PointBreakeven Point is the financial concept describing the sales volume or revenue level at which a business's total revenue exactly equals its total fixed and variable costs — the point of neither profit nor loss.
- CACAcquisition Cost is the total amount a business spends, on average, to win one new customer or conversion.
- LTV (Customer Lifetime Value)LTV is the estimated total revenue a customer will generate for a company over the course of their relationship with the brand; it's a core metric for evaluating long-term marketing return.
- MERMarketing Efficiency Ratio: revenue over a period divided by total marketing spend. It shows whole-marketing efficiency when platform ROAS is inflated.