Guide

How to calculate marketing ROI (with a worked example)

To calculate marketing ROI on a profit basis, subtract total campaign costs from the incremental gross profit the campaign generated, divide by total campaign costs and multiply by 100. A 4x return on ad spend can still leave only a 5% marketing ROI once margin, incrementality and supporting costs are included.

The formula

Two words do the work: incremental (results that would not have happened without the campaign) and gross profit (revenue after the cost of the goods sold). Attributed revenue is what your tracking credits to marketing; it is not automatically additional revenue. Agree the measurement period, margin and cost scope with Finance before comparing results.

Which campaign costs should you include?

Do not use the advertising bill alone. This fictional campaign has £100,000 of media spend and £20,000 of supporting costs, making its total cost £120,000.

Media

Paid search, social and other advertising placements.

£100,000

Agency and freelancers

Campaign planning, management and specialist support.

£10,000

Creative and production

Design, copy, photography, video and landing-page production.

£7,000

Campaign tools and measurement

Campaign-specific software, tracking and testing.

£3,000

Total campaign costs

£120,000

• Include campaign-specific staff time, incentives and testing costs where relevant. Agree how shared staff and software costs are allocated.
• Use revenue net of discounts and returns. Keep VAT treatment consistent with Finance; recoverable VAT is normally excluded from costs.
• Do not subtract the cost of goods sold again if your gross margin already accounts for it. Do not count discounts twice as both reduced revenue and campaign costs.
• For assets used across several campaigns, agree a fair allocation rather than charging the entire cost to each one.

A worked example

The same fictional campaign is credited with £400,000 of revenue. Assume 70% incrementality and a 45% gross margin - these are teaching assumptions, not benchmarks.

1. 1

   Start with attributed revenue

   Revenue your tracking credits to the campaign.

   £400,000
2. 2

   Apply incrementality

   In this fictional example, a holdout test estimates that 70% is additional revenue.

   £280,000
3. 3

   Convert to gross profit

   Multiply incremental revenue by the assumed 45% gross margin.

   £126,000
4. 4

   Subtract full campaign costs

   Include the £100,000 media spend and £20,000 supporting costs below.

   (£120,000)
5. 5

   Profit after campaign costs

   Incremental gross profit less campaign costs, before other overheads and tax.

   £6,000

ROI = (£126,000 - £120,000) ÷ £120,000 × 100 = 5%. The campaign produces £6,000 after campaign costs: 5p for every £1 spent. Using only the £100,000 media bill would give 26%, overstating the return for this cost scope.

This is not company net profit: other overheads and tax are outside the calculation. Whether 5% is enough depends on your business’s required return, uncertainty and alternatives.

ROI vs ROAS

ROAS (return on ad spend) is revenue ÷ ad spend: £400,000 ÷ £100,000 = 4x. It is useful for comparing advertising efficiency, but it ignores gross margin, incrementality and the £20,000 of supporting costs. In this example, ROAS stays at 4x while profit-based marketing ROI is 5%. Label each measure clearly and show the assumptions alongside it.

What if incrementality is uncertain?

Platform attribution alone does not establish what would have happened without the campaign. Holdout or geo tests can help estimate that difference; marketing mix modelling can provide broader evidence, with its own assumptions. If you have no estimate, label the result as attribution-based rather than claiming proven incremental ROI.

Test a range: with the same costs and margin, 60% incrementality gives -10% ROI; 80% gives 20%. Break-even is about 66.7% incrementality (£120,000 ÷ (£400,000 × 45%)). A small change in the assumption can change the spending decision.

For finance directors: see the campaign reconciled to a worked P&L.

Common mistakes

• Using revenue instead of gross profit.
• Assuming every attributed sale is additional, including brand-search sales or existing-customer purchases without testing their incremental impact.
• Leaving out agency, production and tooling costs.
• Comparing costs from one period with returns from another, or mixing forecast customer lifetime value with realised profit.
• Ignoring cash timing - a positive ROI does not mean the business can fund the campaign today.

For wider context on measurement and attribution, see the Salesforce marketing ROI guide. The example above is our fictional illustration, not a reported campaign result.

Marketing ROI questions

What is a good marketing ROI?

There is no universal target. Compare results on the same cost and profit basis, then consider risk, cash timing and the return Finance requires. A positive number is not automatically a reason to scale.

Is ROMI different from ROI?

ROMI means return on marketing investment. Teams use different definitions, sometimes based on revenue rather than gross profit. Write down the formula and cost scope instead of assuming the label means the same thing everywhere.

Can marketing ROI be negative?

Yes. When incremental gross profit is less than campaign costs, ROI is negative on this basis. A campaign with £108,000 of incremental gross profit and £120,000 of costs has -10% ROI.