ROAS vs ROI: Key Differences and When to Use Each

ROAS vs ROI: the difference in formulas

ROAS is revenue from ads divided by ad spend. Only the advertising budget sits in the denominator, and the numerator is revenue, not profit. That means ROAS knows nothing about product cost, delivery, returns, or payment and marketplace commissions.

ROI is the profit from an investment minus the investment itself, divided by the investment. Every related cost goes in, and the result can be negative, which means the money did not come back. ROAS never goes below zero, but it can fall under one, which is just as worrying.

The main differences at a glance:

• ROAS is based on revenue; ROI is based on profit.
• ROAS counts only ad spend; ROI counts all costs.
• ROAS judges the advertising; ROI judges the whole investment.
• ROAS is usually visible in the ad account; ROI has to be assembled from several sources.

Why a high ROAS does not mean profit

Picture an accessories shop in Tashkent selling through Instagram and a Telegram bot, taking payment via Click and Payme. The ad report shows revenue several times larger than the ad budget, so ROAS looks excellent. But the products were bought with a thin markup, some orders go out by courier at the shop's expense, some come back, and there are fees for the media buyer and content shoots. After all of that, little or nothing is left.

ROAS will not show this; ROI will. It is not a reason to switch ads off. It is a reason to look at which products you promote, whether prices or delivery terms should change, and whether the contractor agreement still makes sense.

How to move from ROAS to profit and ROI

If you know your margin, linking the two metrics is straightforward. The order of work:

• Take revenue attributed to ads for the period, ideally from your CRM or accounting, not only the ad dashboard.
• Subtract the cost of goods sold, or multiply revenue by your margin.
• Subtract delivery, commissions and refunds.
• Subtract ad spend and the cost of contractors and tools.
• What remains is profit. Divide it by total investment to get ROI.

What to include in costs and which period to use

Agree once on what goes into the ROI calculation and keep it the same month after month, otherwise the figures cannot be compared. Typical items are ad budget, fees for a media buyer or agency, designer and videographer, analytics and automation tools, cost of goods, delivery and returns.

The period matters too. ROAS is fine to track weekly or monthly. ROI is better measured over a longer window, especially when customers return or deals take time. For a clinic, a training centre or a B2B company, the first purchase may not repay the ad cost while repeat purchases will. A short window understates ROI for such businesses.

Which metric to use, and who should look at it

Each metric has its own job, and it helps not to mix them in one report without explanation.

• ROAS: daily and weekly optimisation, comparing campaigns, audiences and creatives.
• ROI: quarterly and yearly budgets, comparing ads with other investments, judging contractors.
• Profit by channel: the conversation with the owner about whether marketing earns money.
• Common mistakes: calling ROAS the ROI of ads, calculating ROI from revenue, forgetting contractor costs.

End-to-end analytics: where the data comes from

To calculate ROI honestly you need data from ad accounts, CRM, the till and Telegram bots in one place. When it has to be stitched together by hand, reports arrive late with errors, and decisions get made on ROAS simply because it is the number at hand.

End-to-end analytics solves exactly this by tying ad spend to orders and profit. If you want to know which part of your advertising really earns money, talk it through with the markdev team, and we will help build a report that both your media buyer and the business owner can read.