Contents

### What is the ROI?

Return on investment is the abbreviation of “ROI”. It measures the return on investment. It can be calculated by the following formula,

ROI = (Net Profit / Total Cost) x 100

### What Is Return on Ad Spend?

Return on advertising spend is the abbreviation of ROAS. This is the amount of revenue earned by a particular ad or ad campaign and the amount spent on that ad or campaign. ROAS allowing you to determine whether to continue investing in the ad or campaign. It also allows you to evaluate the effectiveness of a given ad or ad campaign.

ROAS = (Revenue Generated by Ad / Money Invested in Ad) x 100

### Now we clear the difference between ROI Vs ROAS from example

Suppose ABC earns \$ 110,000 and spends \$ 30,000 on advertising. Additionally, software cost and other cost about \$ 90,000. In this situation, you can find out how effective the company’s ABC campaign is by using the ROI and ROAS formula:about:blank

In case of ROI

ROI = (Net Profit / Total Cost) x 100about:blank

= (-\$10,000/ \$120,000) x 100 = -8.33%

Net profit = Total Revenue – Total costabout:blank

= 110,000 – 120,000 = -\$10,000

In the case of ROAS

= (\$110,000 / \$30,000) x 100 = 366%

Therefore, the ROI shows that the entire project business has not been paid for, while ROAS provides a highly positive number indicating that the ads are effective. Company ABC is losing money. When you run a digital advertising campaign, it is important to keep ROI and ROAS equal. Otherwise, you can invest a lot of money in a campaign that will cause total damage to your business.

### The biggest difference between ROI and ROAS

The ROI is calculated by the amount you make after paying your expenses, but the ROAS is a measure of how much you earn. ROI only determines the worth of your ads campaign according to investment. ROI can show you the negative number, but not the ROAS on the other hand, even though it shows you if you are lost.

Therefore, you should use ROI when looking at the overall health of the advertising departments. advertisers can narrow down the ad categories at any time to make them more profitable. Advertising professionals are ROAS to find out if their ads are getting back what they spent. ROI is well suited for long-term profitability, while ROAS is well suited for short-term strategic growth.

Google Advertising is a paid advertising platform that falls within the scope of a marketing channel called PPC (Pay-Per-Click), where you have to pay per impression or click per ad.

The advertiser can control its budget through PPC (Pay Per Click) advertising. Advertisers set their budget limits according to per click or per day. Google ads payment is paid by bank or with your debit or credit cards. Since you have set limits on how much you can spend, you should not be surprised about the costs.

### 3. Maximum cost per click

Your payment depends on your choosing keyword. Some keywords are very familiar to users. The advertiser can bid according to their budget limit. You limit the amount you are willing to pay per click on your ad by determining the maximum price per click bid. You can set each click bid for ad groups or individual keywords.