Why is ROI an important metric?

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ROI gives you an idea of ​​the bottom-line profitability of your business, so of course, it's vital to know your final ROI. Additionally, you can get a better idea of ​​how different areas of your business contribute to your final revenue. Just like if you put ROAS and ROI side by side, you can see what proportion of your total revenue was contributed by advertising.

 

What is considered a good ROI?
As long as the ROI proves to be a positive number, then you know that your investment is profitable to some extent. On the other hand, if your ROI is a negative percentage, then you are spending more on costs than you are earning.

ROAS, CPA and ROI - Calculation Examples

Here is another example where you can get a better idea of ​​how costa rica telegram number database all the metrics we covered above are calculated.


Your company has a corporate website, an e-commerce website, and a service website
For 1 month, you have run Google Ads for a seasonal campaign for a new eyeshadow palette.
The total cost of the campaign is $10,000
The price of an eyeshadow palette is $75
Profit per palette is $30
Total number of items sold through ads is 2,000
Sales revenue from advertising is $150,000
Total advertising revenue was $59,000
 

Based on this result, the cost of selling one product is $10,000 ÷ 2,000 units sold, so the CPA is $5.

The sales revenue from the ads is ($150,000 ÷ $10,000) × 100%, so the ROAS is 150%.

The total advertising revenue is ($59,000 ÷ $10,000) × 100%, so the ROI is 590%.

Summarize
 

Although marketing metrics can sometimes seem daunting, in reality, it only takes a simple calculation to find out the profitability of your advertising campaigns. My advice to you is to make a habit of tracking these metrics consistently and use ROAS and CPA to determine which advertising channel reaches the most customers. Then, of course, adjust your marketing strategy to focus on the channel that gets the best results.