ROI vs ROAS: Which Number Tells You If Your Promotion Pays?
ROI vs ROAS explained with simple examples: what each one measures, how to calculate them, why a good ROAS can still lose money, and which one promoters should use for which decision.
ROI and ROAS both answer 'did this pay?', but they answer different versions of the question. Mixing them up is one of the easiest ways to think a campaign is working when it is quietly losing money.
ROAS (return on ad spend) looks only at ad money in and revenue out. ROI (return on investment) looks at everything you spent, including tools, content and people, against your profit.
The two formulas
- ROAS = revenue from the ads ÷ ad spend. Often written as a ratio, like 3x.
- ROI = (total earnings − total costs) ÷ total costs × 100. Written as a percentage.
ROAS has no costs other than the ad itself in it. ROI includes everything, so it is always the stricter number.
Both depend on which earnings you count. Use confirmed commissions for the period, not pending ones, and use the same date range for costs and earnings. If you pay for a shoutout this week and its buyers convert next week, line them up, or one week will look like a disaster and the next like a miracle. Keeping both numbers honest matters more than the formula.
Same campaign, two very different stories
An illustration with made-up numbers. You spend $200 on shoutouts and earn $500 in commissions from them. You also paid $150 to an editor for the content and $80 for tools that month for this campaign.
| Measure | Calculation | Result |
|---|---|---|
| ROAS | $500 ÷ $200 | 2.5x |
| Total costs | $200 + $150 + $80 | $430 |
| Profit | $500 − $430 | $70 |
| ROI | $70 ÷ $430 × 100 | About 16% |
A 2.5x ROAS sounds great. The ROI shows the campaign made a small profit once everything was counted. If the editor had cost a little more, the same 2.5x ROAS would have been a loss.
When to use which
| Decision | Use | Why |
|---|---|---|
| Which of two ad sources is better? | ROAS | Same other costs, quick comparison |
| Should I raise this ad budget? | ROAS, then ROI | Check the source, then the whole picture |
| Is my promotion business profitable? | ROI | Counts every cost |
| Should I hire help? | ROI | People are a cost ROAS ignores |
| Is a free traffic source worth my time? | ROI with your time priced in | No ad spend, so ROAS doesn't apply |
Common traps
- 1Counting pending earnings. Use confirmed earnings; reversals lower both numbers. See how affiliate payouts work.
- 2Short windows on revshare. A revshare source keeps earning after the first month, so early ROI understates it. Customer lifetime value explained covers this.
- 3Forgetting your time. Free traffic isn't free if it takes forty hours a week. Put a value on your hour.
- 4Mixing sources. One blended ROAS can hide a great source and a terrible one. Track each with its own link via the tracking link builder.
A simple monthly check
Once a month, list every source with its spend, confirmed earnings and ROAS. Then add a line with all other costs and work out the month's ROI. Sources with a strong ROAS get more budget; if overall ROI is thin, look at costs before adding spend. Cost per click explained helps with the per-click side, and media buying explained with growing paid traffic.
AMZA's Wingman reads promoters' numbers weekly, which helps with the earnings side; the cost side is yours to log, because only you know what you spent.
FAQ
What is the difference between ROI and ROAS?+
ROAS compares revenue to ad spend only. ROI compares profit to all costs, including tools, content and people. ROI is the stricter test of whether you make money.
What is a good ROAS?+
One high enough that your ROI is positive after all other costs. The break-even ROAS depends on how much you spend besides the ads.
Can ROAS be positive while I lose money?+
Yes. A ROAS above 1x means ads returned more than they cost, but other costs like editing, tools and your time can still push total profit below zero.
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