Advertising ROI vs. ROAS: What they mean and how to calculate them

A billboard can tell you how many cars drive past it. A mailer can tell you how many homes it reached. But figuring out exactly how those exposures contributed to sales can get complicated quickly.

Online advertising gives marketers a much clearer view of what happens after an ad is served. You can measure impressions and clicks, connect advertising activity to conversions and revenue, and use those results to understand whether your campaigns are contributing to the business.

Two metrics are particularly useful here: advertising ROI and return on ad spend (ROAS).

They sound similar, and they’re often used interchangeably, but they answer different questions. Understanding both can help you evaluate advertising more intelligently and make better decisions about what to optimize next.

What is advertising ROI?

Advertising ROI, or return on investment, measures the profitability of an advertising investment relative to its cost.

At its simplest, the formula is:

Advertising ROI = (Return from advertising − advertising investment) ÷ advertising investment × 100

For example, say a business invests $1,000 in an advertising initiative and attributes $1,500 in return after accounting for the costs included in its ROI calculation.

The calculation would be:

($1,500 − $1,000) ÷ $1,000 × 100 = 50% ROI

That means the investment generated a 50% return based on the inputs the business chose to include.

The important phrase there is “chose to include.” ROI can be calculated differently depending on the business. Some companies look at profit. Others incorporate production costs, agency expenses, technology, creative, or other costs associated with generating that return.

That makes ROI useful for understanding advertising in the broader context of the business, but it also means marketers need to be consistent about how they define it.

What is ROAS?

ROAS stands for return on ad spend. It measures the revenue generated for each dollar spent on advertising.

The formula is simpler:

ROAS = Revenue attributed to advertising ÷ advertising spend

If you spend $1,000 on ads and those ads generate $4,000 in attributed revenue:

$4,000 ÷ $1,000 = 4x ROAS

In other words, the campaign generated $4 in attributed revenue for every $1 of advertising spend.

ROAS is especially useful when comparing campaign efficiency because its focus is narrower than ROI. Criteo GO, for example, reports metrics including revenue and ROAS so advertisers can see how campaigns are performing. (Criteo GO features)

ROI vs. ROAS: What’s the difference?

The easiest way to remember the distinction is that ROAS looks specifically at advertising efficiency, while ROI looks more broadly at the return generated by an investment.

Neither metric should automatically replace the other.

A marketer managing campaigns may use ROAS to understand which campaigns are efficiently generating revenue. A business owner may care more about ROI because advertising is only one part of the cost of generating a profitable sale.

Context matters, too. A campaign designed to acquire first-time customers may have different expectations than one focused on converting people who already know the business. Criteo’s ROAS calculator makes a similar point: the appropriate ROAS depends on your business goals, and a lower ROAS may still make sense when the objective is growth or acquiring new customers. (Criteo GO ROAS calculator)

Online advertising gives you more than an educated guess

Measurability is one of online advertising’s biggest advantages. Traditional advertising can certainly build awareness and influence purchases. But with many offline formats, connecting an individual exposure to what someone does afterward can be difficult.

Digital advertising creates more measurable signals along the way. Depending on your setup and attribution model, you can understand who clicked, who visited, what converted, how much revenue was attributed to a campaign, and where ads appeared.

That visibility also creates an opportunity to improve performance while campaigns are running.

The catch is that measurement alone doesn’t guarantee a strong advertising ROI. The quality of your results depends heavily on the data and technology informing your advertising decisions.

Better advertising ROI starts with better signals

Imagine two advertising systems trying to determine whether someone is likely to buy running shoes. One knows that the person fits a broad demographic profile and recently visited a fitness website. The other can learn from patterns across real shopping behavior, product interactions, transactions, and other commerce signals.

Those systems aren’t working with the same picture of purchase intent.

This is why choosing an online advertising partner shouldn’t come down only to where ads can appear. You also want to understand what informs decisions about who sees those ads, when they see them, what they’re shown, and how much an opportunity is worth.

Criteo’s AI has been trained on more than two decades of commerce experience and real shopping behavior. Across Criteo, it makes 100 million AI predictions per second, while more than 5 billion ads are served daily. (Criteo solutions for advertisers)

That scale matters because an online campaign is only as intelligent as the signals informing its decisions. More relevant commerce signals can help an advertising system recognize intent and optimize toward the outcomes that actually matter to a business.

How to improve advertising ROI without managing every decision yourself

Knowing the advertising ROI formula is the easy part. Improving the number requires figuring out what is helping or hurting performance.

There are several places marketers can look.

Improve your targeting. Reaching more people isn’t automatically better. Focus on shoppers whose behaviors and interests suggest that they’re relevant to your business and campaign goal.

Look beyond a single channel. Shoppers move between websites, apps, social platforms, video, and other digital environments. Cross-channel advertising gives you more opportunities to reach someone at a relevant moment instead of depending on one platform to represent their entire shopping journey.

Pay attention to creative. The right audience can still scroll straight past an irrelevant ad. Product recommendations, messaging, imagery, format, and calls to action all influence whether an impression becomes something more.

Keep testing and optimizing. Audience behavior and campaign performance change. Bids, placements, creative, and targeting shouldn’t remain frozen simply because they worked last month.

This is also where AI can remove a lot of manual work.

Criteo GO uses AI to continuously optimize targeting, bidding, and creative across channels. Advertisers define their goals and performance settings, while the system handles more of the ongoing decision-making required to pursue those goals. (Criteo GO features)

AI can also help with the creative workload. Criteo GO supports automated ad generation and format adaptation, including AI-assisted image, copy, and video creation. Instead of producing every variation manually and then trying to determine which combination should run where, lean teams can automate more of the process.

That doesn’t remove the marketer from the equation. It changes where their time goes. You can spend more of it thinking about your products, customers, promotions, and business strategy, while AI handles thousands of campaign decisions that would be difficult to manage manually.

What can that look like in practice?

Real campaign performance provides useful context for what optimization can accomplish.

Agape Diamonds, a U.S.-based jewelry business, used Criteo GO to attract new high-intent traffic, recover abandoned carts, and drive conversions with automated optimization. The company reported a 20% increase in ROAS, a 20% increase in conversion rate, and a 13% increase in average cart value. (See the Agape Diamonds story)

Wine Country Gift Baskets, another U.S. business, used Criteo GO to support holiday growth and reported a 28% year-over-year increase in ROAS. (Explore Criteo GO success stories)

Those results shouldn’t be interpreted as a guaranteed return for another advertiser. Products, audiences, seasonality, goals, websites, and countless other variables affect performance. They do demonstrate why measuring and continuously optimizing advertising is more useful than simply putting a message into the world and hoping the right people see it.

Estimate what your own performance could look like

There isn’t one universally “good” ROAS or advertising ROI that every business should chase. Your margins, goals, product category, customer strategy, and current performance all affect what success looks like.

That’s why a benchmark from another company can only tell you so much.

Criteo GO’s Performance Estimator is designed to provide a more relevant starting point. Enter your website to get a customized estimate based on how businesses like yours perform with Criteo GO. (Try the Criteo GO Performance Estimator)

Online advertising gives you the ability to see what your investment is doing, learn from the results, and keep improving. Pair that visibility with strong commerce data and AI-powered optimization, and you don’t have to personally make every targeting, bidding, placement, and creative decision along the way.

Advertising ROI and ROAS FAQs

What does ROI mean in advertising?

Advertising ROI, or return on investment, measures the return generated by an advertising investment relative to its cost. It can help businesses understand whether advertising is contributing profitably after considering the costs included in their calculation.

What does ROAS mean?

ROAS means return on ad spend. It measures how much attributed revenue an advertising campaign generates for every dollar spent on ads.

How do you calculate ROAS?

Divide the revenue attributed to your advertising by your advertising spend. If you spend $500 and generate $2,000 in attributed revenue, your ROAS is 4x.

How do you calculate advertising ROI?

A basic advertising ROI formula is (return from advertising − advertising investment) ÷ advertising investment × 100. Businesses should clearly define which costs and returns they include so comparisons remain consistent.

Is ROI the same as ROAS?

No. ROAS focuses specifically on the relationship between advertising spend and attributed revenue. ROI is a broader profitability metric and can incorporate additional costs associated with generating that return.

What is a good ROAS for online advertising?

There isn’t one ROAS benchmark that works for every business. The right target depends on factors including margins, products, campaign goals, customer acquisition strategy, and whether you’re prioritizing immediate profitability or longer-term growth.

Can AI improve advertising ROI?

AI can help improve the decisions that influence advertising performance by continuously analyzing signals and optimizing areas such as audiences, bids, placements, product recommendations, and creative. The quality of the underlying data matters, which is why marketers should consider both the AI capabilities and the commerce signals their advertising partner uses.