Term
ROI (Return on Investment)
Top-level profitability KPI: profit relative to the investment made. Goes beyond pure ad spend and includes all relevant cost components.
ROI (Return on Investment) — in more detail
ROI stands for “Return on Investment” — the ratio of profit to invested resources. Formula: (profit − investment) ÷ investment × 100. In marketing, “investment” should ideally cover everything: media cost, agency retainer, tools, internal headcount time, licenses. That’s exactly what separates ROI from ROAS: ROAS is a pure ad-efficiency KPI on a revenue basis, ROI is a business KPI on a profit basis. For day-to-day bidding, ROAS/POAS is more manageable; ROI belongs in reports to leadership and CFO, not in the campaign setup.
Example / In practice
A quarter: €100,000 media + €20,000 agency + €5,000 tools = €125,000 investment. Result: €600,000 revenue × 35 % margin = €210,000 gross profit. ROI = (210,000 − 125,000) ÷ 125,000 = 68 %. Operational steering ran on tROAS 5 — leadership sees the ROI.
Distinction from similar terms
ROAS = revenue vs. ad spend only; POAS = margin vs. ad spend; ROI = profit vs. total investment. Payback Period measures time to break-even, not a ratio. MER is the operational cross-channel variant.
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Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is the average cost of winning one new customer. It is calculated as total marketing and sales spend divided by the number of new customers acquired in that period.
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