Return on Investment — net profit divided by the cost of the investment, expressed as a percentage.
Return on Investment (ROI) measures the profitability of an investment relative to its cost. ROI = (Net Profit / Investment Cost) × 100%. In marketing, ROI accounts for all costs (not just ad spend) including production, tools, salaries, and overheads. A positive ROI means the campaign made money; negative means it lost money. ROI is the ultimate test of marketing effectiveness.
ROI is the universal metric that connects marketing investment to business results. It enables comparison across different marketing channels and campaigns, and justifies marketing budgets to stakeholders.
Content marketing program costs $50,000 (team, tools, production). It generates $200,000 in attributed revenue. ROI = (($200,000 − $50,000) / $50,000) × 100 = 300%.
ROI = ((Revenue Attributed to Marketing − Marketing Cost) / Marketing Cost) × 100. The challenge is accurately attributing revenue to specific marketing activities.
CPA
Cost Per Acquisition — the average cost to acquire one customer or lead.
CAC
Customer Acquisition Cost — total cost to acquire one paying customer.
Customer Lifetime Value
The total revenue a business can expect from a single customer over the entire relationship.
ROAS
Return On Ad Spend — revenue earned for every dollar spent on advertising.