How do you calculate marketing ROI?

Multiply the revenue you credit to marketing by your gross margin to get gross profit, subtract the marketing spend, and divide by the marketing spend. €50,000 of revenue at a 40% margin is €20,000 of gross profit; after €10,000 of marketing, €10,000 is left, an ROI of 100%.

What is a good marketing ROI?

Anything above 0% means the gross profit paid for the marketing; below 0% it did not. Beyond that no single number fits every store: the ROI you need depends on your fixed costs, on how much repeat orders add later, and on whether you are buying growth on purpose. Set your own target from your margins rather than from someone else's average.

What is the difference between marketing ROI and ROAS?

ROAS is revenue per unit of spend; marketing ROI is the profit left after the spend, per unit of spend. The margin links them: ROI = ROAS × gross margin - 1. A 5x ROAS at a 40% margin is an ROI of 100%; the same 5x at a 20% margin is 0%.

Should marketing ROI be calculated on revenue or on profit?

On profit. A revenue-based ROI counts the cost of the goods as return: €50,000 of revenue on €10,000 of spend reads 400% on revenue, but 100% on gross profit at a 40% margin. A store has to pay for its goods before the marketing has paid for anything.

Why do my ad platforms report more revenue than my store took in?

Each platform counts the sales it can tie to its own ads, inside its own attribution window, and some count views as well as clicks. When a buyer saw ads on two platforms, both can count the same order, while your store counts it once. Enter both figures in the calculator to see the gap and the ROI each one gives.

What should count as marketing spend?

At least the ad spend. A fully loaded ROI also counts agency fees, tools and the cost of making creative. Either works if you keep the same choice from period to period and say which one you report.

Free Marketing ROI Calculator

Result

Fill in revenue from marketing, marketing spend, gross margin to see the result.

How it works

Marketing ROI compares what the marketing brought in with what it cost. Revenue alone overstates it, because part of every sale pays for the goods. So the calculator takes the gross profit on the revenue you credit to marketing, subtracts the marketing spend, and divides by that spend.

That is return on marketing investment (ROMI) as the textbook Marketing Metrics defines it: the contribution to profit attributable to marketing, net of the marketing spend, divided by the marketing spend.

gross profit = revenue × gross margin

marketing ROI =
  (gross profit - marketing spend)
  ÷ marketing spend

ROAS = revenue ÷ marketing spend
break-even ROAS = 1 ÷ gross margin

What each term means

Revenue from marketing: The sales you credit to the marketing, for the same period as the spend: one campaign's sales, or all the sales your marketing brought. Which figure to use is the hard part; see below.
Marketing spend: What the marketing cost in that period: the ad spend at least, plus agency fees, tools and creative for a fully loaded ROI.
Gross margin: Revenue minus the cost of the goods, as a share of revenue. For a stricter answer take shipping and payment fees off too; that is contribution margin.
Marketing ROI: What the marketing left after paying for itself, per unit of marketing spend. At 0% it exactly paid for itself; below 0% it cost more than the gross profit it brought.
ROAS: Revenue per unit of marketing spend. ROI and ROAS are tied by the margin: ROI = ROAS × gross margin - 1.
Break-even ROAS: The ROAS at which the gross profit exactly pays for the marketing: 1 divided by the gross margin.

Three ROIs that go by one name

Calculators that report a marketing ROI do not all compute the same thing. Take €50,000 of revenue, €10,000 of marketing and a 40% gross margin:

On revenue: (€50,000 - €10,000) ÷ €10,000 = 400%. It counts the cost of the goods as return, so it runs high for any store that buys or makes what it sells.
On gross profit, the ROMI this calculator uses: (€20,000 - €10,000) ÷ €10,000 = 100%.
On all costs, as Google Ads Help describes ROI: profit over the cost of the goods plus the advertising, (€50,000 - €40,000) ÷ €40,000 = 25%. That is the return on everything the sales cost, not on the marketing alone.

None of them is wrong; they answer different questions. Say which one you report, and never compare one with another.

Which revenue to credit

The ROI is only as true as the revenue you put in. There are three candidates.

What the ad platforms report. Each counts the sales it can tie to its own ads, inside its own window, so a sale that touched two platforms can be counted by both. Google Ads, for one, counts a conversion up to 30 days after a click and 1 day after a view by default. Put this figure in the optional field to see the gap.
What your store took in. Each order counted once, but including sales that would have happened without the marketing: returning customers, word of mouth, people who searched for your name. All of it over all your marketing is your blended ROAS.
What the marketing caused. The textbook definition asks for this one: the sales that would not have happened without it. No dashboard reports it. A holdout test measures it for one channel at a time; a causal read of your GA4 export estimates it for each channel from the paths your buyers took.

Worked example

Example numbers, round on purpose. They are not a real store.

Revenue from marketing: €50,000
Marketing spend: €10,000
Gross margin: 40%
Revenue the ad platforms report: €70,000

1Gross profit: €50,000 × 40% = €20,000
2Gross profit after marketing: €20,000 - €10,000 = €10,000
3Marketing ROI: €10,000 ÷ €10,000 = 100%
4ROAS: €50,000 ÷ €10,000 = 5.00x
5Break-even ROAS: 1 ÷ 40% = 2.50x
6Platforms' figure above yours: (€70,000 - €50,000) ÷ €50,000 = 40%
7ROI on the platforms' figure: (€70,000 × 40% - €10,000) ÷ €10,000 = 180%

On their own figure the platforms make the same marketing look almost twice as profitable. The €20,000 between the two figures is what to check before you move budget on either.

Frequently asked questions

How do you calculate marketing ROI?
Multiply the revenue you credit to marketing by your gross margin to get gross profit, subtract the marketing spend, and divide by the marketing spend. €50,000 of revenue at a 40% margin is €20,000 of gross profit; after €10,000 of marketing, €10,000 is left, an ROI of 100%.
What is a good marketing ROI?
Anything above 0% means the gross profit paid for the marketing; below 0% it did not. Beyond that no single number fits every store: the ROI you need depends on your fixed costs, on how much repeat orders add later, and on whether you are buying growth on purpose. Set your own target from your margins rather than from someone else's average.
What is the difference between marketing ROI and ROAS?
ROAS is revenue per unit of spend; marketing ROI is the profit left after the spend, per unit of spend. The margin links them: ROI = ROAS × gross margin - 1. A 5x ROAS at a 40% margin is an ROI of 100%; the same 5x at a 20% margin is 0%.
Should marketing ROI be calculated on revenue or on profit?
On profit. A revenue-based ROI counts the cost of the goods as return: €50,000 of revenue on €10,000 of spend reads 400% on revenue, but 100% on gross profit at a 40% margin. A store has to pay for its goods before the marketing has paid for anything.
Why do my ad platforms report more revenue than my store took in?
Each platform counts the sales it can tie to its own ads, inside its own attribution window, and some count views as well as clicks. When a buyer saw ads on two platforms, both can count the same order, while your store counts it once. Enter both figures in the calculator to see the gap and the ROI each one gives.
What should count as marketing spend?
At least the ad spend. A fully loaded ROI also counts agency fees, tools and the cost of making creative. Either works if you keep the same choice from period to period and say which one you report.

Related terms: marketing ROI, return on investment, ROAS and incrementality.

Next: which channels earned that ROI?

An ROI is only as true as the revenue you credit to each channel. Your GA4 export already holds how long your buyers take and which channels they touch. First finding free, in your browser; the full read is €99.

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