Expert definition
Expert definition
ROI, or return on investment, is the ratio of an investment’s net economic benefit to the cost required to make that investment. It is commonly expressed as a percentage using ROI = (net benefit minus cost) / cost × 100. An ROI result is meaningful only when the period, included costs, method for determining benefit and degree of attribution are explicitly defined.
Practical explanation
Practical explanation
ROI answers whether invested money came back and what the company gained beyond the original cost. If an investment costs 10,000 euros and produces a net benefit of 3,000 euros after all related costs, ROI is 30 percent. Marketing ROI also requires checks for attribution, delayed conversions, internal labor, technology and implementation expenses.
Frequently asked questions
Frequently asked questions
What does ROI stand for?
ROI stands for return on investment. It compares the net benefit created by an investment with the cost required to produce that benefit.
How is ROI calculated?
Subtract cost from the benefit, divide the difference by cost and multiply by 100. Before calculating ROI, define the benefit, included costs and evaluation period precisely.
What is the difference between ROI and ROAS?
ROAS compares revenue attributed to advertising with advertising cost. ROI uses net economic benefit and a broader set of costs, so it answers a different financial question.
Can ROI be negative?
Yes. Negative ROI means the included benefit did not cover the included cost. Check the period, delayed returns, attribution quality and completeness of costs before making a final conclusion.
What is a good ROI?
There is no universal good ROI. An acceptable result depends on risk, margin, capital requirements, payback time and the alternative uses available for the same resources.
Related marketing terms
Related marketing terms
Sources and editorial record
Sources and editorial record
- American Marketing Association, Marketing Dictionary
- IAB, Guidelines and Standards
- Kotler a Keller, Marketing Management
The definition is an original expert synthesis. For platform metrics, legal questions and decisions, the current primary source and an assessment of the specific context take precedence.