Marketing ROI calculator
Advertising arithmetic is a chain of ratios. Any one of them can be the reason a campaign fails.
%
Return on investment
13.40%
- Return on ad spend
- 2.520
- Cost per acquisition
- 27.78
- Cost per click
- 0.83
- Cost per thousand impressions
- 12.50
- Click-through rate
- 1.5000 %
- Conversion rate
- 3.000 %
- Gross profit
- 5670.00
- Conversion rate needed to break even
- 2.6455 %
Show the working
- Ad spend = 5000
- Impressions = 400 000
- Clicks = 6000
- Conversions = 180
- Average order value = 70
- Gross margin = 45
- Cost per thousand impressions = 5000 / 400 000 * 1000 = 12.5
- Click-through rate = 6000 / 400 000 * 100 = 1.5
- Cost per click = 6000 > 0 ? 5000 / 6000 : 0 = 0.833 333
- Conversion rate = 6000 > 0 ? 180 / 6000 * 100 : 0 = 3
- Cost per acquisition = 180 > 0 ? 5000 / 180 : 0 = 27.7778
- revenue = 180 * 70 = 12 600
- Gross profit = 12 600 * 45/100 = 5670
- Return on ad spend = 5000 > 0 ? 12 600 / 5000 : 0 = 2.52
- Return on investment = 5000 > 0 ? (5670 - 5000)/5000*100 : 0 = 13.4
- Conversion rate needed to break even = 70 * 45/100 > 0 && 6000 > 0 ? 5000 / (70 * 45/100) / 6000 * 100 : 0 = 2.6455
Values are shown to six significant figures here; the arithmetic itself runs on exact fractions and is only rounded where a number is printed.
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The formula
- ROAS = revenue / spend
- ROI = (gross profit - spend) / spend
- break-even conversion rate = spend / (order value x gross margin) / clicks
ROAS on revenue flatters a low-margin business. ROI on gross profit is the honest measure.