What is ROI?

ROI = (Revenue from Marketing - Marketing Cost) ÷ Marketing Cost × 100%. If you spent $5,000 on marketing and it generated $20,000 in sales with 40% profit margin ($8,000), your ROI is ($8,000 - $5,000) ÷ $5,000 = 60%.

Varies by channel and industry. A 5:1 revenue to cost ratio (400% ROI) is considered strong for paid advertising. SEO often delivers higher ROI over time due to compounding returns. Break-even (0% ROI) is acceptable for new customer acquisition if lifetime value is high.

Attribution is tricky, customers touch multiple channels before converting. Long sales cycles delay revenue recognition. Brand awareness benefits are hard to quantify. Use consistent measurement methods and accept that some ROI will be estimated.

ROAS (Return on Ad Spend) measures revenue to ad spend ratio only. ROI considers profit after all costs. A 500% ROAS sounds great, but after product costs and overhead, ROI might be 50%. ROAS ignores profit margins.

Yes, to the extent possible. Knowing which channels deliver positive ROI helps allocate budget effectively. Some channels (SEO, content) have harder-to-measure but still valuable ROI. Compare apples to apples using consistent methods.