ROI
Paid MediaAlso: Return on Investment · Marketing ROI · MROI
Quick definition
Return on Investment (ROI) measures how much financial return you get relative to what you spent. In marketing, it's calculated as revenue minus investment, divided by investment, expressed as a percentage. A positive ROI means you made more than you spent. A negative ROI means you didn't.
This uses gross revenue against investment. For a more honest number, replace revenue with gross profit or contribution margin. The result will be lower but more useful for business decisions.
How it varies across Australia
Marketing ROI varies sharply by channel, industry and measurement method. Businesses that include brand investment in the denominator typically report lower ROI than those who measure channel-by-channel paid spend only. The number is only comparable when the inputs are defined the same way.
See acquisition performance across Australian industries →What it actually means
Return on Investment (ROI) is the metric every CFO wants and almost every marketing team calculates differently. The formula is simple: take what you got back, subtract what you put in, divide by what you put in, multiply by one hundred. The result is a percentage. Positive means profit. Negative means loss.
The argument is in the inputs. Revenue can mean gross revenue, net revenue, gross profit or contribution margin depending on who's running the numbers. Investment can mean ad spend only, or ad spend plus agency fees, plus salaries, plus tools, plus the CMO's time. The same campaign can produce ROI of 40% or 400% depending on which version of the formula you pick.
This is why ROI benchmarks are almost useless across companies. When a competitor says they're getting 300% ROI on their Google Ads, you don't know if they're counting gross revenue against ad spend or net margin against all-in cost. The shapes are incomparable.
ROI is most useful as an internal consistency tool. Run it the same way every period, on the same inputs, and the trend tells you something. Change the definition mid-campaign and you've lost the signal.
ROI is the most agreed-on metric in marketing and the most inconsistently calculated. Everyone reports it. Almost no one defines it the same way.
How to calculate it
ROI = (Revenue - Investment) ÷ Investment × 100
Worked example. You spent $8,000 on a campaign (ad spend plus agency fee). The campaign generated $22,000 in attributed revenue. ROI = ($22,000 - $8,000) ÷ $8,000 × 100 = $14,000 ÷ $8,000 × 100 = 175%. For every dollar invested, you returned $1.75 in profit above the investment.
The Australian context
Australian marketing budgets tend to be smaller than equivalent US budgets, which puts pressure on every channel to prove ROI individually. This creates a measurement bias toward short-cycle, last-click attribution and away from brand and upper-funnel investment, which is hard to attribute on a campaign-by-campaign basis but carries real ROI over time.
The other Australian-specific issue is GST. Revenue figures pulled from ad platforms are typically ex-GST but financial reporting is sometimes GST-inclusive depending on who's pulling the data. A mismatch here silently corrupts the numerator. Check the tax treatment before you compare across reports.
Where people get this wrong
Related terms
Common questions
What's a good marketing ROI?
Any positive ROI is better than a loss, but the useful benchmark is your cost of capital, not a peer average. If your business borrows at a certain rate, your marketing ROI needs to clear that threshold. Industry averages are nearly impossible to compare because the inputs are rarely defined the same way.
How is ROI different from ROAS?
Return on Ad Spend (ROAS) measures gross revenue generated per dollar of ad spend. ROI measures profit relative to total investment. ROAS is always positive. ROI can be negative. ROAS is useful for channel optimisation. ROI is useful for business decisions. They're related but answer different questions.
Should I use gross revenue or profit when calculating ROI?
Profit, or at minimum gross profit after cost of goods. Gross revenue inflates the result and ignores whether the sale actually made money. The revenue version is common because it produces a bigger number, not because it's more useful.
Why does my agency's ROI number differ from mine?
Almost certainly an attribution and definition mismatch. Agencies often report revenue attributed to their channel against their fee only. You may be counting all revenue, against all spend including internal costs. Both are valid framings for different conversations, but they're not the same number.
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About New Rebellion
New Rebellion is a marketing intelligence consultancy. We build tools, score Australian businesses on how their marketing actually performs, and publish Debrief every day. This dictionary is part of how we work in the open.
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