Understanding ROAS vs ROI

When it comes to measuring marketing success, there are two acronyms that tend to dominate the conversation: ROAS (Return on Ad Spend) and ROI (Return on Investment). They may appear to have similar measurements upon first glance, but they actually measure very different things.

Understanding the difference between these two metrics is crucial for Irish businesses and agencies alike because it shapes how you judge performance and where you decide to invest next.

What is ROAS?

ROAS focuses purely on advertising spend. It tells you how much revenue your ads generate for every euro you invest in them.

So basically, if you spend €1,000 on a social campaign that generates €4,000 in sales, you have a ROAS of 4:1 or 400%.

For agencies, ROAS is a practical way to demonstrate the immediate effect of a client’s ad spend. It gives a clear picture of which campaigns or channels are hitting the mark and which might need tweaking. In competitive sectors, being able to quickly compare the performance of Google Ads with Meta Ads, for example, can have a real impact on strategy.

What is ROI?

ROI takes on a broader view. Instead of focusing solely on ad spend, it factors in all the costs associated with a campaign, including those related to production, distribution, and other expenses.

Using the same example as above, if your campaign generated €4,000 but €3,000 went into costs, the actual profit of your campaign is only €1,000. Once you divide that by the full investment, your ROI will look quite different from your ROAS.

This matters because ROI reflects the bigger picture of profitability. This metric determines whether scaling a campaign makes sense financially. A campaign with an impressive ROAS might appear successful on paper, but if the ROI isn’t strong, it may not be sustainable in the long run.

ROAS vs ROI: Finding the Balance

Now that you know the difference between ROAS and ROI, you might be wondering which one matters most. The truth is, both are important, but for different reasons.

ROAS is great for getting a quick read on how your ads are performing, showing whether the money you’re spending is driving revenue. ROI, on the other hand, takes a step back and looks at the bigger picture, revealing whether that revenue actually turns into profit once all costs are factored in.

For agencies, it’s essential to track both metrics. ROAS shows quick wins, providing clients with proof that their campaigns are delivering results in real-time. Meanwhile, ROI tells the bigger story by showing the long-term value and overall profitability. When viewed together, they create a more complete and transparent picture of how well a campaign is really performing.

Bringing It Together

It’s not about choosing between ROAS and ROI, but it is about understanding when each is most useful. As an agency, we measure this by using a reporting suite to help make the distinction. Platforms like Storehero.ai enable us to track ROI at both the campaign and product levels. A strong ROAS doesn’t always mean a good ROI. To understand this, we need to understand metrics such as COGs (cost of goods sold), margins, and LTV (lifetime value). Overall, aiming for a universally high ROAS can often mean we’re stunting growth. However, taking a holistic view means ad spend is working as efficiently as possible.

At Glassbox, we work with our clients to cut through the jargon, measure what really matters, and turn insights into growth. In today’s digital landscape, striking a balance between ROAS and ROI is essential. Get in touch and see how we can help your business grow!