ROI vs ROAS: Which One Is More Important For Digital Marketing?

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Andrew Aebersold, CEO of Mediaura, looks into the camera while explaining ROI vs ROAS. He is wearing a dark blue checkerboard print collared shirt. The background is an office scene, featuring a bookshelf and plant.

In digital marketing, there are two metrics that sound similar, often get confused, and are key to understanding how much you’re really making off of your digital marketing. So, in this article, we’re going to talk about it. ROI vs. ROAS: What do these two terms mean, and which one deserves more of your attention? 

The answer may be key to deciding whether to continue with your current digital marketing or make a change. 

What is ROAS?

ROAS stands for Return on Ad Spend. It is a straightforward calculation. You divide the revenue generated from your ads by the amount of money you spent on them.

For example, if you spent $1,000 on ads and generated $4,000 in sales directly from those ads, your ROAS would be 4:1. That means for every dollar you spent on advertising, you made $4 in revenue.

At first glance, this number can feel impressive. Platforms like Meta and Google make it easy to track. You can log into the dashboard and see instantly how your ads are performing in this narrow sense. Some agencies like ROAS because it requires no additional data input. It is simple, clean, and quick.

But here is the catch: ROAS only looks at top-line numbers. It does not take into account how much you spent on making your ads, including agency fees. 

In short, ROAS will not tell you if your marketing is profitable.

What is ROI?

ROI stands for Return on Investment. It goes much deeper than ROAS. ROI does not just measure revenue versus ad spend. Instead, it evaluates the true profitability of your entire investment by including things such as agency and creative fees.

This is why ROI is the better measurement when deciding if your marketing is sustainable. A campaign might show a strong ROAS, but after considering expenses, you could still be losing money.

In some cases, a business is better off not advertising at all if its ROI is negative.

ROI vs ROAS: Which is More Important?

Both metrics matter, but they serve different purposes.

  • ROAS is excellent for benchmarking ad performance at the campaign level. You can use it to understand if your ads are generating revenue compared to the dollars you put in.
  • ROI is the gold standard for assessing your profitability. It tells you if the money you spend on ads, plus associated costs, produces a return that makes sense for your business.

This distinction is critical. Many companies celebrate a strong ROAS without realizing that their ROI is negative. That is a dangerous place to be. Positive ROAS does not automatically equal positive ROI. For true business growth, ROI should be your guiding star.

Final Thoughts

Understanding ROI vs ROAS is simple, but it is also critical. Do not settle for vanity metrics. Look deeper and focus on what really matters.

If you would like help evaluating your ROI and ROAS or building smarter campaigns, contact our team at Mediaura.

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