What Is Return on Investment (ROI)?
Quick Answer
ROI (Return on Investment) is a measure of how much profit or value you got back relative to what you spent — calculated as (return minus cost) divided by cost — used to judge whether a marketing activity was actually worth doing.
ROI vs. ROAS — What's the Difference?
| ROI | ROAS | |
|---|---|---|
| Includes profit margin? | Yes | No — revenue only |
| Formula | (Return − Cost) ÷ Cost | Revenue ÷ Ad Spend |
Why Does ROI Matter for a Small Business?
- It's the clearest way to compare completely different marketing activities (an ad campaign vs. a referral program) on the same basis.
- Without measuring it, spending decisions end up based on gut feeling rather than actual results.
How Do You Calculate ROI?
ROI = (Return − Cost) ÷ Cost × 100. Spending £500 on ads that generated £1,500 in revenue with £800 in product cost gives a return of £700 on a £500 spend — a 140% ROI.
Key Takeaways
- ROI measures actual profit relative to cost, not just revenue.
- It lets you compare unrelated marketing activities on the same basis.
- A negative ROI is a clear signal to change or stop.
How NetNav Helps
NetNav helps connect your marketing activity to actual business outcomes, so ROI is measurable rather than guessed.
Frequently Asked Questions
What's a good marketing ROI?
It varies by industry and channel, but a positive ROI (more return than cost) is the baseline bar — beyond that, compare it against your other channels rather than an external benchmark.
What's the difference between ROI and ROAS?
ROAS only measures revenue against ad spend; ROI factors in your actual profit margin, making it a more complete measure of real business impact.
Can ROI be negative?
Yes — it means a channel or campaign cost more than it returned, which is a clear signal to stop or change approach.