ROI

What is ROI?

Return on Investment (ROI) measures the efficiency of a marketing or analytics initiative by comparing the profit generated to the total cost. In web analytics, ROI helps you decide which campaigns to scale, pause, or redesign. It’s tool-agnostic—you can calculate ROI in GA4 or in alternatives like Plausible, Matomo, or Simple Analytics.

Formula

ROI (%) = [(Attributable Revenue – Total Cost) ÷ Total Cost] × 100

Example: Spend $2,000; revenue attributable $6,000 → ROI = [(6,000–2,000)/2,000]×100 = 200%.

How is ROI calculated in practice?

1. Attributable revenue. Pull revenue tied to conversions (e.g., orders, subscriptions). You can derive it from AOV × number of orders or model long-term impact with LTV.
2. Attribution model. Decide how you credit touchpoints—e.g., Last Touch or a data-driven model. Misaligned attribution = misleading ROI.
3. Total cost. Include media (e.g., CPC bids, platform fees), production, tools, and ops.
4. Segmentation. Break out ROI by channel/source/medium using UTM parameters and by audience or geography.

Quick reference

Component	What it means	Typical source
Attributable Revenue	Money from tracked conversion events	Ecommerce or CRM export
Total Cost	Media + creative + tooling + ops	Ad platforms + finance
Conversion Quality	Rate and value of outcomes	Conversion Rate, AOV
Long-term Value	Profit beyond first order	LTV

Why ROI matters

• Budget allocation: Move spend to the highest-ROI channels quickly.
• Strategy testing: Validate hypotheses with controlled experiments (A/B, landing page changes) and watch ROI shift alongside conversion rate.
• Executive alignment: A single percentage that translates analytics into business value.

Common pitfalls

• Attribution drift: Changing models mid-quarter breaks comparability.
• Short-term bias: Ignoring payback windows where LTV exceeds Day-0 revenue.
• Hidden costs: Forgetting creative time or data tooling inflates ROI.
• Vanity traffic: High sessions, low value—track ROI against outcomes, not just pageviews.