As Australian SMEs plan their marketing spend, understanding how to measure success is critical. Two terms you’ll often hear are ROI and ROAS. While both are about measuring returns, they look at different things. Simply put, ROI – Return on Investment – is the broader measure, while ROAS – Return on Ad Spend – is specifically for advertising campaigns.

Let’s break it down. ROI calculates the profit generated from all marketing investments, not just paid ads. This includes things like content creation, email marketing, SEO, even the time your team spends on social media. It looks at the total cost of your marketing efforts and compares that to the overall revenue those efforts generate. The formula is (Net Profit / Cost of Investment) x 100. So, if you invested $10,000 in marketing and generated $30,000 in profit, your ROI is 200%.

ROAS, on the other hand, focuses solely on your paid advertising. It tells you how much revenue you’re getting back for every dollar spent on ads. The formula is (Revenue from Ads / Cost of Ads) x 100. If you spent $5,000 on Google Ads and generated $20,000 in revenue, your ROAS is 400%. This is a really useful metric for optimising specific campaigns – identifying which ads, keywords, or platforms are performing best.

Here are a few key insights to keep in mind:

• ROAS is a component of ROI: Your ROAS contributes to your overall ROI, but it’s not the whole picture.
• Different goals, different metrics: Use ROAS for quick ad campaign adjustments and ROI for a broader view of marketing effectiveness.
• Attribution matters: Accurately attributing revenue to the correct marketing touchpoints is crucial for both calculations. This can be tricky, but tools like Google Analytics 4 are improving attribution modelling.
• Focus on profitability, not just revenue: ROI uses *profit*, which accounts for the cost of goods sold. ROAS uses *revenue*, which doesn’t.

Ultimately, both ROI and ROAS are valuable metrics. We recommend tracking both to get a complete understanding of your marketing performance. By regularly analysing these figures, you can make informed decisions about where to allocate your budget and maximise your returns as you head into 2026 and beyond. If you’re unsure where to start, consider a marketing audit to identify your current ROI and ROAS, and pinpoint areas for improvement.