Return on investment compares a defined net return with the cost of the investment.
A practical example
If an activity costs 1,000 and produces 300 in net benefit after the relevant costs, ROI is 30%.
What to watch for
State the formula, cost base, time period and attribution assumptions. Revenue divided by advertising spend is ROAS rather than profit-based ROI.
Related reading
Explore Return on Ad Spend (ROAS) and LTV or Lifetime Value. Try our break-even ROAS calculator for a practical next step. See how this fits into Paid advertising.