Ad ROI Calculator
What is ad ROI?
Ad Return on Investment (ROI) measures the profitability of your advertising campaigns by comparing the revenue generated from your ads to your total ad spend. It is different from Return on Ad Spend (ROAS) which measures the revenue that you get from your ad spend and not the profit. Ad ROI can give you insights on how well your ad campaigns are performing and help you to optimize your advertising strategies accordingly.
Relevant channels: Google Ads, Facebook Ads, Instagram Ads, LinkedIn Ads, Twitter Ads.
How to use this ad ROI calculator
To calculate your ad ROI, enter the number of impressions you have received, click-through rate (CTR), conversion rate, revenue per conversion, and total ad spend. The tool will instantly calculate your ad ROI and provide an accurate assessment of how much profit you are generating on your ad spend.
Ad ROI formula
Ad ROI = ((Total Revenue - Total Ad Spend) / Total Ad Spend) × 100
Here, the total revenue is calculated through the following steps by taking multiple variables into account:
Total Clicks = Number of Impressions × (CTR / 100)
Total Conversions = Total Clicks × (Conversion Rate / 100)
Total Revenue = Total Conversions × Revenue per Conversion
Understanding the ad ROI result
The ideal ad ROI depends on various factors, including industry, target audience, and campaign goals. Typically:
- A high ad ROI indicates that your campaign is generating more revenue than your ad spend, indicating that your ad campaign is effective and profitable.
- A low ad ROI suggests that your campaign is not driving sufficient returns. This indicates that you need to resolve issues in ad targeting, creative strategy, or budget allocation.
When to calculate ad ROI
Ad ROI should be calculated in the following scenarios:
- After a campaign to measure its success and determine if it met financial goals
- To compare the effectiveness of different ad strategies or platforms
- Before increasing your ad budget to ensure the campaign is delivering positive results
- To evaluate the impact of specific optimizations, such as new creative or better targeting
How to calculate ad ROI (with example)
Let’s say you had 100,000 impressions, a CTR of 2%, a conversion rate of 5%, revenue per conversion of $50, and total ad spend of $10,000. Your ad ROI can be calculated as follows:
Ad ROI = ((Total Revenue - Total Ad Spend) / Total Ad Spend) × 100
Ad ROI = ((5,000 - 10,000) / 10,000) = -50%
Here,
Total Clicks = 100,000 × (2 / 100) = 2,000 clicks
Total Conversions = 2,000 × (5 / 100) = 100 conversions
Total Revenue = 100 × 50 = $5,000
In this example, your ad ROI is -50%, meaning that your ad campaign resulted in a loss of 50% of your investment.
How to improve your ad ROI
- Refine your ad targeting to attract higher-quality leads
- Increase your CTR by using more compelling headlines and visuals
- Optimize landing pages to increase conversion rates
- Focus on remarketing campaigns to re-engage past visitors
- Regularly adjust your ad bids to maximize return on ad spend (ROAS)
- Test different creatives and messaging to improve campaign performance
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