Let's clear things up.
ROI, ROMI, and ROAS are key metrics for evaluating the profitability of investments, including in marketing and advertising. Despite their common goal of measuring return on investment, there are significant differences in their interpretation. Here's my humble take on the main distinctions and similarities between them:
๐ฅ๐ข๐ (๐ฅ๐ฒ๐๐๐ฟ๐ป ๐ผ๐ป ๐๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐)
Calculated as total profit minus expenses, divided by expenses.
Allows assessment of the overall financial outcome of business investments.
Measured in percentages. Always (always) calculated based on profit. Ideally - based on marginal profit (minus fixed costs).
๐ฅ๐ข๐ ๐ (๐ฅ๐ฒ๐๐๐ฟ๐ป ๐ผ๐ป ๐ ๐ฎ๐ฟ๐ธ๐ฒ๐๐ถ๐ป๐ด ๐๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐)
Calculated as marketing revenue minus marketing expenses, divided by marketing costs. In other words, it literally measures the profitability of your marketing. Marketing here includes not only performance but also media, brand, PR, and more. Measured in percentages.
๐ฅ๐ข๐๐ฆ (๐ฅ๐ฒ๐๐๐ฟ๐ป ๐ผ๐ป ๐๐ฑ๐๐ฒ๐ฟ๐๐ถ๐๐ถ๐ป๐ด ๐ฆ๐ฝ๐ฒ๐ป๐ฑ)
Calculated as advertising revenue generated by advertising campaigns, divided by advertising expenses. Allows evaluation of the return on advertising expenditures. Literally - how many percent of your performance expenses come back into your pocket. Measured in percentages and considered cohort-wise.
If you work with GA4 to BigQuery exports, be sure to check out my SQL cheat sheet.
