ROI vs. ROAS: How to Calculate Both

ROI and ROAS get confused constantly, even though they answer different questions. Here's the difference, the formulas, and a worked example specific to media buying on agency accounts.

ROAS: return on ad spend

ROAS is calculated as revenue divided by ad spend: ROAS = Revenue / Ad Spend × 100%. Spend $1,000 on traffic and generate $3,000 in revenue, and ROAS comes out to 300% — three dollars back for every dollar spent on ads.

ROI: net return on investment

ROI accounts for more than ad spend — it factors in the full cost of the product or offer: ROI = (Revenue − Total Costs) / Total Costs × 100%. ROI shows actual profit, while a strong ROAS can mask an unprofitable unit economy if product cost or affiliate commission eats up the whole margin.

A worked example

Say ad spend is $1,000 and revenue is $3,000 (a 300% ROAS), but product cost and payment processing came to $2,200. ROI = ($3,000 − $1,000 − $2,200) / ($1,000 + $2,200) × 100% = −6%. A campaign with an excellent ROAS turns out unprofitable on ROI — a classic trap for anyone looking at only the first metric.

Which metric to use, and when

• ROAS is useful for fast in-platform optimization — comparing performance across ads inside one campaign
• ROI is what you need for a real business decision, including the rental commission on your agency account, CPA network fees, and every other cost

How agency account rental fits into ROI

The 5–20% rental commission on an agency account is part of total cost and belongs in your ROI calculation alongside product cost. See Renting an Agency Ad Account, Explained for how that commission is set.

Target benchmarks by vertical

There's no universal "good" ROAS — for gambling and betting with high customer LTV, even a 100–150% ROAS can be acceptable early on, while sweepstakes with a one-time, low payout needs a much higher ROAS to clear all its costs.

Calculate ROI over the customer's LTV across several months, not just the first campaign — subscription-based verticals (recurring nutra, finance products) often don't pay off on the first conversion alone.

The takeaway

ROAS shows how a specific campaign is performing; ROI shows whether the business is actually profitable once every cost, including agency rental commission, is factored in. Optimizing on ROAS alone is a common mistake that hides unprofitable funnels behind good-looking numbers.