ROI vs ROAS: What’s the Difference and Why It Matters

If you've ever run a digital ad campaign whether it's on Facebook, Google, or Instagram chances are you've come across the terms ROI and ROAS. And if you're like most marketers or business owners, you've probably used them interchangeably. But here’s the truth: ROI and ROAS are not the same, and mixing them up can lead to poor decisions, wasted budgets, and missed growth opportunities.

In today’s fast-moving digital world especially in markets like Pakistan, where every rupee of ad spend counts knowing the difference between ROI and ROAS isn't just a technical detail. It’s a strategic advantage. Whether you’re a startup founder in Lahore, an eCommerce store owner in Karachi, or a digital marketer working with clients globally, understanding these two metrics can literally change the way you measure success.

Here’s the deal:

• ROAS (Return on Ad Spend) tells you how much revenue you’re generating for every rupee you spend on ads.

• ROI (Return on Investment) goes deeper showing whether your entire business effort, including salaries, tools, and overheads, is truly profitable.

This blog will break down ROI vs ROAS in the simplest way possible with formulas, local examples, comparison charts, and even a downloadable checklist to help you track both. You’ll also learn when to use each metric, how they apply to different business models in Pakistan, and how to make better decisions based on them.

So if you're ready to stop guessing and start tracking what really matters, let's dive in.

ROAS vs ROI — Definitions, Formulas & Examples

Understanding the difference between ROAS (Return on Ad Spend) and ROI (Return on Investment) starts with knowing what each one truly measures. While they both evaluate performance, they do so from very different angles and using the wrong one could cost your business money.

What Is ROAS? (Return on Ad Spend)

ROAS is a simple but powerful metric used to measure the effectiveness of your advertising. It answers the question: “For every rupee I spend on ads, how much revenue do I get back?”

ROAS Formula:

ROAS =    Revenue from Ads​ / Ad Spend​

Example:

Let’s say you run a Facebook campaign in Pakistan spending PKR 10,000 and generate PKR 30,000 in revenue. Your ROAS would be:

30,000 / 10,000 = 3

This means you earned 3 rupees for every 1 rupee you spent. A ROAS of 3x is generally considered healthy for eCommerce businesses.

But remember: ROAS only looks at ad spend. It doesn’t include other costs like product sourcing, packaging, salaries, software tools, or rent. That’s where ROI comes in.

What Is ROI? (Return on Investment)

ROI is a broader metric. It tells you how profitable your entire business or campaign is after factoring in all expenses not just ad spend.

ROI Formula:

ROI = Net Profit / Total Investment ×100 

Example:

Let’s go back to that same Facebook campaign. Suppose you made PKR 30,000 in revenue, but your total costs (including ad spend, product costs, staff time, delivery, tools) were PKR 25,000. That leaves you with PKR 5,000 profit.

ROI = (5,000 / 25,000) × 100 = 20%

A 20% ROI means your campaign was profitable but not as wildly successful as the ROAS alone suggested. This shows how relying only on ROAS can be misleading.

Key Insight:

• ROAS tells you how well your ads performed.

• ROI tells you if your business is actually making money.

Both are important, but they answer very different questions.

Key Differences Between ROI and ROAS

While ROI and ROAS are often used side by side, they serve very different purposes in your marketing strategy. Knowing when to focus on each and what each number is telling you can dramatically change how you plan, execute, and optimize your campaigns.

Comparison Table: ROAS vs ROI

Here’s a simple side-by-side breakdown to help you quickly understand the core differences:

 

Why It Matters Which One You Use

Many marketers especially those running eCommerce or service-based businesses in Pakistan make the mistake of tracking only ROAS and thinking they’re making money.

But here’s the kicker: a high ROAS doesn’t always mean profit.

Let’s say a Pakistani online clothing store runs Google Ads and gets a ROAS of 5x looks amazing, right? But after adding in costs like product returns, delivery, staff salaries, website hosting, and payment gateway fees, their actual ROI turns out to be negative.

On the other hand, a campaign with a lower ROAS (like 2x) could still be profitable if the costs are low and customer lifetime value is high.

Rule of Thumb:

• Use ROAS to optimize your ad spend and see how effective your campaigns are.

• Use ROI to understand the full picture whether you’re actually building a profitable business.

In short, ROAS is a magnifying glass, and ROI is the full map. You need both to make smart, data-driven decisions.

How to Track & Improve Both Metrics

Now that you understand the difference between ROI and ROAS, the next step is knowing how to track them properly and more importantly, how to optimize both to grow your business.

Free & Paid Tools for Pakistani Marketers

Here are some tools you can use to measure and monitor ROAS and ROI without breaking the bank:

Free Tools:

• Google Analytics 4 (GA4):
  Track campaign performance, user behavior, conversions essential for calculating ROI and ROAS side-by-side.

• Meta Ads Manager (Facebook + Instagram):
  Automatically shows ROAS for campaigns; you can export data for deeper ROI analysis.

• Google Sheets or Excel ROI Templates:
  Great for calculating total investment (including salaries, tools, shipping, etc.) manually especially useful for service-based or local Pakistani businesses.

• HubSpot ROI Calculator (Free Version):
  Good for service agencies or startups to estimate ROI from inbound campaigns.

Paid Tools (with Free Trials):

• SEMrush or Ahrefs (for SEO/Content ROI):
  Calculate content ROI and organic reach vs. investment.

• Zoho Analytics / Power BI:
  Combine marketing, sales, and financial data to generate real ROI dashboards.

• Pakistani CRMs or ERPs:
  Some local platforms (like Salesflo, Veevo Tech, or Bazaar’s business tools) allow limited ROI tracking within localized apps.

Tips to Optimize ROI and ROAS Together

Improving both metrics at once requires a strategic approach here’s what works:

1. Cut Wasted Ad Spend

• Use lookalike audiences instead of broad targeting.

• Eliminate underperforming ad sets or creatives.

• Focus on top-performing platforms (e.g., Facebook might outperform TikTok in some Pakistani niches).

2. Increase Average Order Value (AOV)

• Bundle products

• Offer free shipping thresholds

• Use upsells & cross-sells in the checkout flow

This boosts revenue without increasing ad spend, improving both ROAS and ROI.

3. Track Full Funnel Costs

• Don't forget delivery charges, packaging, COD failure rates, staff time, tools, and hidden fees.

• Many businesses in Pakistan miss these when calculating ROI — leading to false confidence.

4. Measure Customer Lifetime Value (LTV)

• If you're spending PKR 1000 to acquire a customer who returns 3 times, your real ROI is much higher.

• Use LTV to justify higher ROAS thresholds.

Pro Tip for Pakistan-Based Advertisers:

Due to local ad account issues, fluctuating conversion rates, and currency changes, tracking costs properly is even more critical. Make sure your ROI includes all payment gateway fees, dollar rate losses, and bonus/reward costs especially if you offer discounts or giveaways.

Conclusion

By now, you’ve probably realized that ROI and ROAS are not just “marketing metrics” they’re business survival tools.

Here’s the bottom line:

• ROAS shows how efficiently your ads are working.

• ROI tells you whether your business is truly profitable.

In a competitive landscape like Pakistan, where ad budgets are often tight and margins can be razor-thin, focusing on just one of these numbers can lead you astray. High ROAS doesn’t mean high profits, and a positive ROI doesn’t always mean your ads are performing at their best.

The smartest marketers in 2025 whether in Lahore, Karachi, Islamabad, or beyond are using both. They track campaign-specific ROAS to fine-tune ad strategies, and they monitor overall ROI to ensure sustainable business growth.

So, what should you do next?

• Use ROAS to manage your daily ad decisions.

• Use ROI to guide your long-term strategy.

• Combine both for full visibility because guessing is no longer an option.

Ready to get control of your marketing numbers?