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Are you investing in digital advertising but not sure of your ROI on that spend? Then you need the Credo ROI Calculator on the right side of this screen (or above this content if on mobile)!
ROI (short for Return On Investment) is a key metric that many executives ask about, but it’s unclear what they are actually asking for. Thus, it is part of a digital marketer’s job to help them understand what you mean when you say ROI, and to understand what they mean.
Return On Investment is a straight-forward calculation:
ROI is Revenue – All Expenses (including Ad Spend) divided by Ad Spend
You’ve probably heard executives asking about ROI as well when they really mean ROAS, which is Return on Ad Spend and is a much simpler calculation:
ROAS is Revenue divided by Ad Spend
ROI and ROAS are important metrics to calculate because they are how you know if your advertising is profitable or not.
If you only know one and not the other, you are not getting a full picture on your advertising campaigns and activities.
ROAS tells you how your ads perform overall with driving revenue. It’s the most basic metric to know when advertising.
ROI gives you the full picture on your advertising activities because it tells you if the full undertaking (taking into account ad spend, people, other needs like design) is unprofitable, break even, or profitable (and possibly qualified to scale).