For Australian SMEs, understanding the true profitability of marketing spend is critical. We’re seeing a lot of businesses rely heavily on Return on Ad Spend (ROAS), but increasingly, we believe this metric can be misleading. While ROAS has its place, focusing solely on it obscures the bigger picture – your overall Return on Investment (ROI). As marketing channels become more complex and attribution more challenging, especially heading into 2026, ROI provides a far more accurate reflection of what’s actually working.

ROAS calculates revenue generated for every dollar spent on advertising. It’s useful for quickly assessing ad campaign performance. However, it ignores significant costs associated with running your business. ROI, on the other hand, considers *all* costs – not just ad spend – against the revenue generated. This includes salaries, software, overheads, and the cost of goods sold. This holistic view is what separates effective marketing from simply running ads.

Here’s why ROI is becoming even more important:

• Increased Channel Complexity: Customers now interact with businesses across multiple touchpoints. ROAS struggles to attribute value accurately across these journeys. ROI looks at the overall impact, regardless of the initial touchpoint.
• Rising Customer Acquisition Costs: As competition intensifies, acquiring customers is becoming more expensive. ROAS doesn’t account for the increasing cost of everything *besides* the ad itself.
• The Importance of Lifetime Value: ROAS often focuses on immediate sales. ROI allows you to factor in the long-term value of a customer, providing a more accurate picture of profitability.
• Data Privacy Changes: With growing privacy concerns and changes to tracking technologies, attributing revenue solely to ads is becoming harder. ROI relies less on granular tracking and more on overall business performance.

In 2027, we anticipate these trends will only accelerate. Businesses that continue to rely solely on ROAS risk making poor marketing decisions, investing in channels that appear profitable on the surface but don’t deliver true business value. To truly understand your marketing profitability, we recommend shifting your focus to ROI. Start by meticulously tracking all marketing-related costs, not just ad spend, and then calculate the overall return on your investment. This will give you a clearer, more accurate picture of what’s driving growth and where to allocate your resources for maximum impact.

If you’re unsure where to start with calculating your marketing ROI, reach out to us for a free consultation. We can help you develop a robust tracking system and analyse your data to unlock hidden profitability.