ROI (Return on Investment, investment return) — a metric that shows how well the invested money paid off. It is expressed as a percentage and helps determine whether the investment generated a profit or loss relative to the initial costs.
ROI is used in business, investing, marketing, and other areas. In traffic arbitrage, it is used to evaluate the return on a traffic campaign: how much money the campaign setup generated relative to its costs.
How to calculate ROI
Basic formula:
ROI = (Revenue − Expenses) / Expenses × 100%
For example, a media buyer spent $1 000 on a traffic campaign and generated $1 300 in revenue:
($1 300 − $1 000) / $1 000 × 100% = 30%
The ROI was 30%. This means that the invested $1 000 was returned, with an additional $300 earned on top of it, or 30% of the initial costs.
If the revenue was only $800 with the same expenses:
($800 − $1 000) / $1 000 × 100% = −20%
The ROI will be −20%. The investment did not pay off, and the loss was $200.
The ROI value makes it possible to quickly understand the overall result:
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ROI > 0% — the investment paid off and generated a profit;
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ROI = 0% — revenue was equal to expenses;
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ROI < 0% — expenses were higher than revenue.
ROI and profit — are not the same thing
Profit shows how much money was earned, while ROI shows how efficiently the investment paid off.
For example:
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campaign setup A: expenses $1 000, profit $300 → ROI 30%;
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campaign setup B: expenses $5 000, profit $500 → ROI 10%.
In absolute monetary terms, campaign setup B generated more — $500 compared to $300. But relative to the invested budget, campaign setup A was more profitable.
Therefore, ROI is useful for comparing results with different spending volumes. Profit alone does not provide this perspective.
ROI and ROAS
These metrics are easy to confuse, but they are calculated differently. ROI shows profit relative to expenses, while ROAS — shows revenue relative to advertising expenses. Therefore, with $1 000 in expenses and $1 300 in revenue, ROI will be 30%, while ROAS — 130%. Accordingly, the break-even point for ROI — is 0%, while for ROAS — it is 100%.
