ROI (Return on Investment)

ROI (return on investment) is the net profit from an investment divided by the cost of that investment, shown as a percentage. An ROI of 50% means every 1 dong you put in brings back 1.5 dong, a profit of 0.5 dong.

What is ROI?

The Cambridge Dictionary defines return on investment as the profit from an activity for a particular period compared with the amount invested in it (Cambridge Dictionary, accessed October 2026). In marketing, the investment is the campaign, and the profit is what the campaign brings in after every related cost is subtracted.

Google Ads describes ROI as the ratio of your net profit to your costs, and calls it typically the most important measurement for an advertiser because it shows the real effect advertising has on the business (Google Ads Help, About return on investment, accessed October 2026).

ROI formula

ROI = (Revenue – Total costs) / Total costs × 100%

Google Ads writes it as (Revenue – Cost of goods sold) / Cost of goods sold. For physical products, cost of goods sold here means the manufacturing cost of the items sold plus advertising costs. Google’s example: a product costs $100 to make and sells for $200, ads sell 6 of them, and Google Ads costs are $200. ROI = (1,200 – 800) / 800 = 50% (Google Ads Help, Return on investment (ROI), accessed October 2026).

For a lead generation business, the cost is the ad spend and the revenue is the average value of a lead. Google’s example: if 1 in 10 leads becomes a $20 sale, each lead is worth $2.

Example: ROI including cost of goods (hypothetical)

A shop sells air fryers at VND 1,500,000 each, with a cost of goods of VND 900,000. In October it spends VND 40 million on ads and sells 120 units. The shop pays VND 50,000 per order for delivery and packing.

• Revenue = 120 × 1,500,000 = VND 180 million.
• Cost of goods = 120 × 900,000 = VND 108 million.
• Delivery and packing = 120 × 50,000 = VND 6 million.
• Total costs = 108 + 6 + 40 = VND 154 million.
• Net profit = 180 – 154 = VND 26 million. ROI = 26 / 154 = 16.9%.

ROAS for the same campaign is 180 / 40 = 4.5. That sounds good, yet each dong spent earns only about 0.17 dong of profit. If you count only ad spend as the cost, (180 – 40) / 40 = 350%, a nice number that ignores VND 114 million of goods and delivery costs.

ROI vs ROAS

Google Ads gives this example: if you want $5 in sales for every $1 spent on ads, set a Target ROAS of 500% (Google Ads Help, About Target ROAS bidding, accessed October 2026). That calculation only contains revenue and ad spend. To find the ROAS you need to break even, see ROAS.

Common mistakes when calculating marketing ROI

• Leaving out cost of goods and delivery, as in the 350% calculation above.
• Not stating the period. New customers can be unprofitable in their first month, with profit coming from later purchases. In that case, comparing CAC with LTV is closer to reality than a one-month ROI.
• Counting canceled and returned orders. With cash on delivery, an order the customer refuses still costs a delivery fee and brings no revenue.

Frequently asked questions

What is a good ROI?

Any ROI above 0 means a profit on the costs you counted. There is no benchmark that fits every industry; compare ROI across your own channels and months.

What does a negative ROI mean?

A loss. An ROI of -20% means every 1 dong spent brings back only 0.8 dong.

Is ROI a KPI?

It can be, when the campaign goal is profit. See how to choose a KPI.

If you need to recalculate ROI for each ad channel with full cost of goods and delivery fees, contact Adtek.