Calculate online advertising ROI: formula, ROAS and examples

How to calculate ROI and ROAS for your Google Ads, Facebook Ads or other channel campaigns? Formulas and practical examples.

Published on January 16, 2026

Measuring the return on investment (ROI) of advertising campaigns is essential for optimizing marketing budgets. Google Ads, Meta Ads, TikTok Ads: every dollar invested must generate more than a dollar in revenue. Two key indicators dominate: ROI (Return on Investment) and ROAS (Return on Ad Spend).

Understanding the conversion

ROI measures the overall profitability of an investment taking into account total costs (not just the ad budget). ROAS measures only the revenue generated per dollar of ad spend, without accounting for other costs. E-commerce businesses often use ROAS as it's simpler to calculate in real time. A ROAS of 4× (400%) means every dollar invested generates $4 in revenue — but this can still be unprofitable if margins are thin.

📐 Formula

ROI = ((Revenue - Total costs) / Total costs) × 100 | ROAS = Revenue / Ad spend | CPA = Ad spend / Number of conversions

📊 Conversion table

Metric	Formula	Break-even	Target
ROI	(Revenue - Costs) / Costs × 100	> 0 %	> 20–50 %
ROAS	Revenue / Ad spend	> 1×	3× to 5× depending on margin
CPA	Ad spend / Conversions	< Customer value	< Unit margin
CTR	Clicks / Impressions × 100	> 1–2 %	> 3–5 %
Conversion rate	Purchases / Visits × 100	> 1 %	2–5 % e-commerce

💡 Practical examples

Example 1: Google Ads campaign — $500 budget, $2,000 revenue

ROAS = 2,000 / 500 = 4× (400%). If margin is 50%, net revenue = $1,000. Net profit = 1,000 - 500 = $500. ROI = (500/500) × 100 = 100%.

Example 2: minimum ROAS based on margin

If margin is 30%, minimum profitable ROAS = 1 / 0.30 = 3.33×. Below this threshold, every sale generated by the ad is unprofitable.

Example 3: optimize your target CPA

Average order value: $80. Margin: 40% → $32/sale. Maximum CPA to remain profitable: $32. If current CPA = $45 → campaign is unprofitable by $13 per conversion.