Digital marketing agency › [en] Stratégie › 📊 ROAS or ROI: Why and How to Calculate These Key Metrics

📊 ROAS or ROI: Why and How to Calculate These Key Metrics

23 October 2026

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[en] Stratégie

Your campaign shows a ROAS of 4, yet your business is losing money. This is more common than you might think: ROAS measures the revenue generated by your ad spend, not what is left over once all the bills are paid.

To calculate ROAS and ROI correctly, you need to understand what each one measures and where errors typically creep in. Here are the two formulas, a worked example we carry through from section to section, and a profitability benchmark to adjust to your own margin.

Key takeaways

ROAS measures the revenue generated per euro of advertising spend. ROI measures the profit generated per euro of total cost.
ROAS = attributed revenue ÷ ad spend. ROI = [(total gain – total cost) ÷ total cost] × 100.
The break-even point is calculated on gross margin: break-even ROAS = 1 ÷ gross margin.
There is no universal “good ROAS”: sources quote 2:1, 3:1, or 4:1.
A high ROAS can hide a low ROI: partial attribution, hidden costs, thin margins.

🧭 Understanding the Fundamentals: Definitions and Roles

Two metrics, two questions. ROAS asks whether advertising is generating revenue; ROI asks whether the business is making money. Their names sound similar, yet their verdicts can point in opposite directions.

📣 What Is ROAS (Return On Ad Spend)?

ROAS (Return On Ad Spend): the ratio between the revenue attributed to your ads and the advertising spend incurred. A ROAS of 4 means that every €1 invested in advertising generated €4 in sales.

It is a campaign-level metric: it isolates advertising from the rest of the business, making it possible to compare ads, channels, or products against one another.

Google expresses it as a percentage. Its Help Centre gives the example of €5 in revenue for every €1 of advertising budget — a ’ROAS of 500%. In Google Ads, the “Conv. value/cost” column divides the total conversion value by the total cost of ad interactions.

One detail deserves attention: the numerator is attributed revenue. The figure therefore depends on how your conversions are linked to your ads — a point we will return to in the pitfalls section below.

💼 What Is ROI (Return On Investment)?

The ROI measures the profit earned relative to all costs incurred. It applies to any investment: a campaign, a project, a tool, a hire. Harvard Business School Online describes it as the ratio of net profit to the cost of the investment.

Where ROAS talks about revenue, ROI talks about profit. Saying that ROI measures revenue is a common mistake: ROI is always calculated after deducting costs.

Time matters too. According to Shopify, a 30% ROI over three years can be worth less than a 20% ROI over one year.

Doko’s view: We believe these two metrics are not in competition. ROAS guides your ads day to day; ROI checks that this guidance is actually serving the business.

🧮 The Formulas for Calculating ROAS and ROI Correctly

Both calculations fit in a single line. The mistakes, however, arise from what you put in the numerator and denominator. Let us work through the formulas, using the same online shop as a running example.

🔢 How to Calculate ROAS: Formula, Example, and Application

The formula:

ROAS = revenue attributed to advertising ÷ ad spend

Take an online shop that invests €2,000 in Google Ads over one month and generates €8,000 in attributed sales. The calculation gives 8,000 ÷ 2,000 = 4, a ROAS of 4:1, or 400% (the ratio multiplied by 100).

On marketplaces, you will come across ACOS, which is the inverse of ROAS: according to HubSpot, an ACOS of 25% is equivalent to a ROAS of 4:1.

In practice, calculate ROAS by campaign, channel, and product — never just as a global average. A healthy average can conceal one campaign burning through its budget while another compensates.

Note: some sources, including HubSpot, label the formula (revenue – costs) × (100 ÷ costs) as “ROAS as a percentage”. This is actually ROI, not ROAS. Do not conflate the two.

🧾 How to Calculate Overall ROI: Formula and Accounting for Hidden Costs

The formula:

ROI = [(total gain – total cost) ÷ total cost] × 100

This is equivalent to the Harvard Business School Online version: (net profit ÷ cost) × 100. Keeping the same shop, with its revenue of €8,000:

Add up all costs: €2,000 in advertising, €800 in agency fees, €200 in tools, €4,800 in products and delivery. Total: €7,800.
Note the total gain: €8,000 in sales.
Subtract and divide: (8,000 – 7,800) ÷ 7,800 = 0.0256.
Multiply by 100: ROI = 2.56%.

Same campaign, two readings: a ROAS of 400% and an ROI of 2.56%. The ROAS looks impressive; the ROI reveals the shop is barely making money. The difference comes from hidden costs: agency fees, internal salaries, tools, affiliate commissions, production, and delivery.

Note: ROI must be read over a defined period. Always specify the timeframe, otherwise two ROI figures cannot be meaningfully compared.

Doko’s view: In our experience, most calculation errors stem from a forgotten cost, rarely from the wrong formula. List your costs before you divide.

⚖️ ROAS vs ROI: What Are the Real Differences?

The difference comes down to two things: the scope of costs and the nature of the output. ROAS compares revenue to advertising spend alone; ROI compares profit to all costs. The table below sets the two side by side.

🗂️ Comparison Table: Use Cases, Micro vs Macro View

ROAS provides a micro view: a slice of the business. ROI provides a macro view: the whole picture, advertising included.

Criterion	ROAS	ROI
Question asked	Is my advertising generating revenue?	Is my business generating a profit?
Result measured	Attributed revenue	Profit (total gain – total cost)
Costs included	Advertising spend only	All costs incurred
Level of analysis	Campaign, channel, product	Project or business
Formula	Revenue ÷ ad spend	[(gain – cost) ÷ cost] × 100
Use case	Deciding between ads and bids	Deciding on a budget or investment
Limitation	Ignores margins and ancillary costs	Less precise for isolating a single campaign

🚦 Why Managing One Without the Other Leads to Poor Strategic Decisions

A case published by Triple Whale illustrates this: a campaign with a ROAS above $3 for every $1 spent, but an overall ROI of -23.08% once all other costs were included ((5,000 – 6,500) ÷ 6,500 × 100). The reverse also exists: a ROAS of 0.3 with an overall ROI of +25%, thanks to organic channels.

Tracking ROAS alone pushes you to overspend on low-margin products. Tracking ROI alone prevents you from knowing which campaign is actually working. Each metric is blind to something the other illuminates.

Note: a low ROAS is not always bad. If your customers reorder over three years, a 2:1 acquisition ROAS can be perfectly profitable. ROAS ignores customer lifetime value entirely.

Doko’s view: We recommend tracking both in parallel: ROAS to act quickly on campaigns, ROI to verify each month that the effort is genuinely paying off.

Looking to improve your ROAS and ROI to make your advertising campaigns truly profitable?

Google Ads audits, reliable conversion tracking, bidding optimization and conversion rate improvements: Doko helps you analyze performance, identify wasted ad spend and make data-driven decisions to maximize your return on investment.

Request a quote

🎯 What Is a “Good” ROAS and a “Good” ROI?

There is no universally good ROAS. The right figure is whichever covers your costs and delivers your target profit. To find it, you start from your margin, not from an industry average.

🧱 The Target ROAS Concept (Break-Even Point)

The logic is straightforward: every €1 of advertising must generate at least €1 of gross margin. Hence the break-even ROAS formula:

Break-even ROAS = 1 ÷ gross margin (as a decimal)

With a gross margin of 70%, you need 1 ÷ 0.7 = 1.43. HubSpot cites a tolerable ROAS of 2:1, which should be read as a rounded floor. With a 20% margin, you need 1 ÷ 0.2 = 5.

Back to our shop. A gross margin of 40% gives 1 ÷ 0.4 = 2.5: with €2,000 in advertising, you need €5,000 in sales to break even.

Triple Whale offers a variant: average order value divided by cost of acquisition. With a basket of $50, a gross margin of 50%, and a cost of acquisition of $25, the result is 2, the same as 1 ÷ 0.5.

Note: use gross margin, never net margin. Net margin is already calculated after advertising costs, which makes the reasoning circular. And a ROAS of 100% is not a break-even point: it simply means advertising is generating as much revenue as it costs.

This break-even figure feeds into Google Ads’ Target ROAS strategy (formerly “Maximise conversion value with target ROAS”, renamed in June 2026). On the ROI side, a positive result is the bare minimum: compare it against your other channels and the duration of the investment.

📈 Indicative Benchmarks by Industry

Benchmarks vary by source. Shopify commonly quotes 4:1, HubSpot 3:1, and Amazon Ads places the average at around 2:1. Triple Whale recorded a median of 2.04 for its client brands in 2024.

On the sector side, two 2024 figures are reported by HubSpot FR (article dated 10/03/2026), attributed to Triple Whale:

fashion accessories: 4.48;
children’s toys: 6.07.

Treat them as rough benchmarks. We have not been able to verify them against primary sources, and margin, channel, account maturity, and competition all affect the outcome. A 6.07 tells you nothing if your margin requires more, and a 2 can be excellent if your margin is healthy.

Doko’s view: Our stance: do not compare your ROAS to a competitor’s; compare it to your own break-even point. That is what determines whether a campaign deserves more budget.

⚠️ Common Pitfalls and Mistakes When Calculating (and How to Avoid Them)

An accurate formula applied to flawed data still produces a bad result. Two pitfalls crop up in almost every account: tracking that captures only part of sales, and costs that vanish from the calculation.

🔍 The Problem of Partial Tracking and Conversion Attribution

In Google Analytics, “all the credit for the important action, known as a key event, is attributed to the last ad the customer clicked”. Direct visits receive no credit. The first-click, linear, time-decay, and position-based models have been unavailable since November 2023.

Google Ads fills the gaps with modelled conversions: without them, Google states, reports would reflect only the observable portion of conversions. Their values can be revised upwards over several days, up to five. Exclude the recent conversion-delay window, otherwise your ROAS will appear artificially low.

For a site without online sales, link advertising, leads, and sales through your CRM and offline conversions. Finally, every platform claims its share of sales: the sum of the reported ROAS figures often exceeds actual revenue.

Note: a ROAS figure read from a platform is never objective. Cross-check it against your actual sales before deciding on a budget.

🧩 Overlooking Ancillary Costs in the ROI Calculation

A ROAS of 5:1 guarantees nothing if production, procurement, or distribution costs absorb the bulk of revenue. A ROAS that is high on a thin margin can be less profitable than an average ROAS on a healthy margin.

ROAS also ignores agency fees, internal salaries, tools, and affiliate commissions. The approach: reconstruct the total cost, then calculate ROI, as in the example above.

Doko’s view: We believe reliable tracking is worth more than a sophisticated formula. When we take over an account, we always check the tracking before touching the bids.

🚀 How to Optimise Your Campaigns to Improve ROAS and ROI

ROAS is driven by three levers: cost per click, conversion rate, and average order value. Improving any one of them is enough to move ROAS, provided you are measuring accurately. Here is how to pull these levers, in the order we approach them in practice.

🎛️ Refine Targeting and Sharpen Your Data

Start upstream: look at average position, impression share, CTR, and CPC — these metrics frequently explain a disappointing ROAS. Add negative keywords to cut out queries with no purchase intent, and segment your campaigns by product or by margin.

Then make your conversion data reliable (values, offline sales) before enabling automated bidding. Target ROAS requires a defined conversion value and a minimum history: for Display, at least 15 conversions with a value over 30 days.

🖱️ Improve the User Experience (UX) and Conversion Rate (CRO)

An ad does not sell by itself: it is the landing page that closes the deal. Offer landing pages that are relevant and straightforward, A/B test your headlines and buttons, and work on the purchase journey.

Increasing the average order value (bundles, free delivery thresholds) pushes ROAS higher without additional spend. Bear in mind that CRO costs sit on the ROI side, not the ROAS side.

Doko’s view: We consistently find that improving a landing page delivers more than increasing a budget. Optimising conversion before volume is always our first step.

❓ FAQ: Everything You Need to Know About Calculating ROAS and ROI

📌What is the difference between ROAS and ROI?

ROAS compares revenue attributed to advertising alone. ROI compares profit to all costs. The first judges a campaign; the second judges the profitability of an investment.

⚙️What is the ROI formula?

ROI = [(total gain – total cost) ÷ total cost] × 100. This is equivalent to (net profit ÷ cost) × 100. A positive result means the investment is generating a profit.

📝What is a good ROAS?

There is no universal threshold. Your break-even point is 1 ÷ gross margin. The 4:1 benchmark is frequently cited but not universally agreed upon: HubSpot favours 3:1, Amazon Ads places the average at around 2:1.

⚠️My ROAS is high but my business is losing money — is that possible?

Yes. Thin margins, overlooked ancillary costs, inflated attribution, or customers who do not reorder can all explain it. Always cross-reference ROAS with overall ROI.

👀How do I improve an insufficient ROAS?

Start by making your tracking reliable, then refine your targeting and negative keywords, and optimise your landing pages. Finally, check that your pricing and margin allow you to reach break-even.

Doko’s view: Knowing how to calculate ROAS and ROI is only useful if you act on the results. Our role is to turn these figures into budget decisions.

Want to check your own figures? As a Google Premier Partner, Doko offers a free audit of your campaigns to calculate ROAS and ROI with no blind spots, and tells you where your ROAS is masking a fragile ROI.