4 Key Differences Between ROI and ROAS
When it comes to developing an effective marketing campaign, it’s imperative to have data that gives you feedback on how successful your efforts are.Thank you for reading this post, don't forget to subscribe!
This has traditionally involved businesses looking at the ROI related to a strategy, but in recent times, ROAS has also taken the spotlight as a relevant statistic.
Although the two are very similar in many ways, they’re ultimately two completely different things used in different ways. Down below, you’ll read about the main differences between ROI and ROAS.
Significant Differences Between ROI and ROAS
When it comes to the ROAS vs. ROI discussion, it’s imperative to know what the two terms mean. According to analytics leader AppsFlyer, ROI means “return on investment” and measures how much money was made on a campaign overall. In contrast, ROAS means “return on ad spend” and measures how much money is ultimately received through advertisements for every dollar spent on them. Marketing platforms like AppsFlyer can help you measure and analyze essential metrics like ROAS and ROI.
Here are four critical differences between the two concepts.
Profit Vs. Revenue
ROI is largely a shorthand term for the profit received by a business venture following a marketing campaign. It includes all the expenses required for a campaign to be successfully run subtracted from all the revenue received from advertisements.
ROAS refers to the amount of money received from customers following their encounter with advertisements divided by the cost of advertising. In many ways, it’s just another way to measure revenue.
One Is Comprehensive And The Other Specific
ROI is typically used to measure the overall health of a campaign by considering all the factors involved in advertising. This doesn’t just include the individual costs of advertising, but also the expenses of everything it takes to get a campaign set up in the first place, such as staff salaries, rent, utilities, etc.
By comparison, ROAS looks at what individual type of advertisement gains in terms of revenue and doesn’t look at the big picture.
Short-Term Vs. Long-Term
Due to how comprehensive ROI is, it’s used to see how successful a marketing campaign is in the long run, which could contain dozens or even hundreds of different kinds of advertisements. ROAS is a more short-term consideration that can see how successful advertising is going at a particular moment.
Used For Different Purposes
Figuring out what advertisements work and if a campaign is even successful is very relevant information to have. ROAS can be used to significant effect to determine the success of the different individual components involved within a campaign. In contrast, ROI can in many ways be used as an overall assessment of a campaign’s success, or lack thereof.
Making The Most of The Differences
Statistics can be tricky sometimes, but the reality is that they’re indispensable. Both ROI and ROAS can be used to significant effect. Still, the differences between the two should be firmly understood as they deal with two fundamentally different aspects of a marketing campaign.