KB Glossary: Return on Investment (ROI)

Return on Investment (ROI)

A calculation of the monetary value of an investment versus its cost. The mathematical formula is: (profit minus cost) / cost. If you made $10,000 from a $1,000 effort, your return on investment (ROI) would be 0.9, or 90%. ROI is often used to evaluate business strategy, including all advertising and marketing efforts. Return on ad spend (ROAS) is a similar metric, but it focuses more on specific tactics, such as an individual ad campaign.

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