What is the difference between ROI and ROAS?

ROI measures profit relative to the cost of any investment. ROAS measures revenue relative to ad spend only, and ignores other costs.

One above your break-even ROAS, which is 1 divided by your gross margin. At a 50% margin, anything above 2x covers product costs, before other expenses.

Can a campaign have a good ROAS but negative ROI?

Yes. If margins are thin or other costs are high, revenue can exceed ad spend while the campaign still loses money.

ROI vs ROAS: Return on Investment and Return on Ad Spend

Return on investment (ROI) compares the profit an investment produces with its cost. Return on ad spend (ROAS) compares the revenue from an advertising campaign with what you spent on the ads. ROI is about profit across any investment. ROAS is about revenue from ads only.

By Javier Alonso, Founder & CEO. Updated 2026-10-25.

Formulas

ROI: (Gain from investment − Cost of investment) ÷ Cost of investment × 100%
ROAS: Revenue from ads ÷ Ad spend (Usually written as a ratio, such as 4:1, or a multiple, such as 4x.)
Break-even ROAS: 1 ÷ Gross margin (At a 50% margin you need at least 2x ROAS to cover product costs.)

ROI: return on investment

ROI works for any spending decision: a marketing campaign, a new hire, a tool or a piece of equipment. It answers "did this make more than it cost?". Its weakness is that it ignores time. A 50% ROI over five years is very different from 50% in three months, so state the period.

ROAS: return on ad spend

ROAS answers a narrower question: how much revenue did each unit of ad spend bring in? It is useful for comparing campaigns and channels day to day. Its weakness is that it ignores product costs, staff time and returns, so a campaign can have a good ROAS and still lose money.

Worked example

A store spends $2,000 on ads and the ads bring in $8,000 of sales. ROAS = $8,000 ÷ $2,000 = 4x.

The products have a 40% gross margin, so the sales earn $3,200 of gross profit. Subtract the $2,000 ad spend and $400 of agency fees, and the profit is $800.

ROI = ($3,200 − $2,400) ÷ $2,400 = 33%.

Break-even ROAS at a 40% margin is 1 ÷ 0.4 = 2.5x. The campaign is profitable, but less than the 4x figure suggests.

When to use each

Use ROAS to compare and tune ad campaigns quickly.
Use ROI to decide whether an investment, including a whole channel, is worth continuing.
For subscription products, look beyond the first purchase. Compare CAC with lifetime value, because a campaign that loses money on the first month can be very profitable over a year.

For your role

Service providers: Reporting ROI as well as ROAS to clients builds trust, because it shows the result after costs.

Primary sources

Return on Investment (ROI) — Investopedia

Common questions

What is the difference between ROI and ROAS?: ROI measures profit relative to the cost of any investment. ROAS measures revenue relative to ad spend only, and ignores other costs.
What is a good ROAS?: One above your break-even ROAS, which is 1 divided by your gross margin. At a 50% margin, anything above 2x covers product costs, before other expenses.
Can a campaign have a good ROAS but negative ROI?: Yes. If margins are thin or other costs are high, revenue can exceed ad spend while the campaign still loses money.