Free tool
Marketing ROI calculator
The short answer
Marketing ROI is (return - cost) / cost. Measured on revenue, $24,000 from $6,000 of marketing is a 300% ROI; measured on gross profit at a 35% margin, it is ($8,400 - $6,000) / $6,000 = 40%. The profit figure is the one that says whether the campaign made money, and the gap between the two is where many campaigns that look good actually lose.
On this page 6 sections
Marketing ROI
Agency fees, tools, creative, staff time
Revenue minus cost of goods, as a percentage
ROAS
4.80x
ROI on revenue
300%
ROI on gross profit
40%
Net profit
$2,400
Profitable after product costs: each $1 of marketing returns $1.40 of gross profit. Break-even revenue is $17,143.
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The formulas
- Total cost = media spend + other campaign costs (agency fees, tools, creative, staff time).
- ROAS = attributed revenue / media spend.
- ROI on revenue = (revenue - total cost) / total cost.
- ROI on gross profit = (revenue x gross margin - total cost) / total cost.
- Break-even revenue = total cost / gross margin.
Worked example
A campaign costs $5,000 in ads and $1,000 in agency fees and tools, and is credited with $24,000 of sales at a 35% gross margin. ROAS is 4.8x and ROI on revenue is 300%. Gross profit is $8,400, so the campaign nets $2,400 and ROI on profit is 40%. At a 20% margin the same campaign would lose $1,200; break-even revenue would be $30,000.
The hard part is the revenue
- Attribution decides the answer. Last-click credit, data-driven credit and a platform's own view of its conversions produce different revenue for the same campaign. See marketing attribution models explained.
- Platforms over-claim. Each ad platform counts conversions it touched, so their totals usually add up to more than your actual sales. Use the store or CRM as the record.
- Some sales would have happened anyway. Brand search and retargeting often take credit for customers already on the way. A holdout or geo test measures the true lift.
- Repeat purchases. A first-order ROI ignores customers who come back. For subscriptions or repeat buyers, add the LTV to CAC view.
For ad-only targets use the break-even ROAS calculator. Tools that tie revenue back to campaigns are compared in the best marketing attribution tools, and for calls and offline sales see the best call tracking software.
Questions
- How do you calculate marketing ROI?
- Subtract the total marketing cost from the return and divide by the cost. Use gross profit, not revenue, as the return to see whether the campaign made money: ($8,400 profit - $6,000 cost) / $6,000 = 40%.
- What is the difference between ROI and ROAS?
- ROAS is revenue divided by ad spend, a ratio such as 4.8x. ROI is profit relative to all costs, a percentage that can be negative. A 4.8x ROAS can still be a loss if margins are thin.
- What is a good marketing ROI?
- Any ROI above zero on gross profit means the campaign paid for itself on the sales attributed to it. Whether it is good enough depends on your other uses for the money and how confident you are in the attribution.
Sources
Related guides
Marketing attribution models explained
First-click, last-click, linear, time-decay, position-based and data-driven attribution, explained with one worked example and how to pick one.
Why GA4 numbers don't match Google Ads, Shopify or your CRM
The usual reasons GA4 disagrees with Google Ads, Shopify, Search Console and your CRM: consent, ad blockers, attribution, dates, thresholds and definitions.
Analytics for Shopify stores: what to measure and how
Shopify analytics versus GA4, setting up the Google and YouTube app and customer events, the store metrics that matter, and when to add surveys or quizzes.
How to measure social media ROI
A practical method for social media ROI: what to count as return, UTM tagging, GA4 channel reports, platform metrics that matter, link-in-bio tracking and the ROI formula.