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ROMI and ROAS: formulas, difference and example

ROAS is revenue per 1 UAH of advertising spend; ROMI is the return on marketing investment, taking margin and incrementality into account. ROAS is convenient for tactics, while ROMI shows real profitability and whether scaling makes sense.

What the Metrics Measure

ROAS evaluates campaign effectiveness in terms of revenue; ROMI evaluates the economic effect of marketing in terms of contribution profit, taking into account full costs and the real increase in demand.

Calculation

  • ROAS = Net revenue (attributed to advertising) / Advertising spend
  • Break-even ROAS ≈ 1 / Gross margin, % (all else being equal)
  • ROMI = (Incremental contribution − Marketing) / Marketing
  • Blended ROAS/ROMI — taking all marketing costs into account

Use net revenue excluding VAT and net of returns/commissions; give priority to incremental estimates (lift/holdout).

Calculation example

100,000 was spent on advertising, which brought 500,000 in revenue at a 40% gross margin, i.e. 200,000 of gross profit. ROAS = 500,000 / 100,000 = 5.0 (500%). ROMI = (200,000 − 100,000) / 100,000 × 100 = 100%: every unit of advertising came back and earned another.

Data Sources

Advertising platforms (spend), MMP/web analytics (UTM, attribution), CRM/billing (orders), ERP/1C (COGS, returns, commissions), marketplaces/acquiring.

Interpretation

  • A high ROAS does not guarantee profit with a low margin/high returns
  • ROMI > 0 — added value, ROMI < 0 — marketing is unprofitable
  • Evaluate quality: AOV/ARPU, retention, returns, LTV/CAC
  • Check incrementality, especially for brand/remarketing

Useful Breakdowns

  • Channels / campaigns / creatives / keywords
  • Brand vs non-brand, audiences/placements
  • Regions / currencies / devices
  • Promotional vs base price; new vs returning customers

Dashboard Visualizations

  • Trend of ROAS and ROMI with plan vs actual
  • Waterfall: Spend → Revenue → Margin → Contribution → ROMI
  • Scatter of channels: X — Spend, Y — ROAS/ROMI, size — orders
  • Scaling curve: budget → ROAS/LTV/CAC
  • Table of break-even ROAS by category/margin
  • Lift/holdout reports (incrementality)

How to Set Targets

Define the break-even ROAS, targets of ROMI > 0, LTV/CAC, and a maximum Payback; establish an attribution policy, a plan of A/B and lift tests, an SLA for refreshing creatives, and promotion rules.

Common Mistakes

  • ROAS based on gross revenue including VAT; ignoring returns/commissions
  • Relying only on platform data without reconciling with CRM/ERP
  • Last-click overstates brand/remarketing
  • Mixing paid/organic in Blended without labeling
  • No incremental measurements

Questions for Discussion

  • What is the break-even ROAS for key categories?
  • Where is ROMI highest, and why: margin or incrementality?
  • What is the Payback forecast with +20% budget?
  • Which creatives/audiences deliver the best uplift?

Questions and answers

How is ROMI different from ROAS?

ROAS is revenue per unit of ad spend, ROMI is profit above marketing costs. A high ROAS with a low margin can still mean loss-making marketing.

How do you calculate ROMI?

ROMI, % = (gross profit from marketing − marketing spend) / marketing spend × 100.

How do you calculate ROAS?

ROAS = revenue from advertising / advertising spend. It is often shown as a percentage or a ratio (for example 5 : 1).