First tools available: The Ad Library + Competitor Tracking
ROI (Return on Investment)
The profit or loss generated from an investment, expressed as a percentage of the original investment.
Tags:metricsprofitabilityinvestmentbusiness performanceunit economics
Return on Investment (ROI) measures the profit you make relative to what you invested, expressed as a percentage.
The formula: ROI = ((Revenue - Total Costs) ÷ Total Costs) × 100
If you invested $1,000 total (ads + product + shipping) and made $1,500 in revenue, your profit is $500 and your ROI is 50%.
ROI vs ROAS:
- ROAS: Only looks at ad spend vs revenue
- ROI: Looks at ALL costs vs profit
Example showing the difference:
- You spend $100 on ads
- You make $400 in revenue (4x ROAS — looks great!)
- But your product costs $200 and shipping is $50
- Total costs: $350, Profit: $50
- Actual ROI: 14% (not as impressive)
Why ROI matters more than ROAS:
ROAS can be misleading. A 5x ROAS means nothing if your margins are thin. ROI tells you the real story: are you actually making money after everything is accounted for?
Track both ROAS and ROI. Use ROAS for quick campaign comparisons and optimization. Use ROI to understand true business profitability.