1 Learn the concept
Return on investment, or ROI, tells you whether a campaign made more money than it cost. It is one of the most important numbers in marketing because it lets you compare very different activities on the same scale. The basic formula subtracts the cost from the gain, divides by the cost and multiplies by 100. This lesson shows the formula, how to apply it and the common mistakes that make ROI look better or worse than it really is.
2 See it in action
- Formula: (gain minus cost) divided by cost, times 100.
- Count all costs: ad spend, tools, content creation and your time.
- A positive ROI means the campaign earned more than it cost.
- Beware of short windows: some campaigns pay back over months.
Worked example
Two campaigns, counted honestly
Campaign A: ad spend $800 plus $200 for design is a $1,000 cost. It produced $1,500 in sales. ROI is ($1,500 − $1,000) ÷ $1,000 × 100 = 50%.
Campaign B: ad spend $1,000, a $150 tool and five hours of work valued at $30 an hour ($150) is a $1,300 cost. It produced $3,000. ROI is ($3,000 − $1,300) ÷ $1,300 × 100, about 131%.
Result: B is clearly better, even after counting the tool and the labor.
Check: if you leave out labor and tools, B looks like 200% and flatters the result. Count every cost.
3 Study an example
Example scenario
Two campaigns each cost $1,000. One earns $1,500 and the other $3,000. Their ROI is 50% and 200%. The second is clearly better, even though both were profitable.
4 Apply it and download
- Choose a campaign and list every cost.
- Estimate the revenue it produced.
- Calculate ROI with the ROI calculator.
Worksheet ROI calculatorOpen, print or save as PDF