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Return on investment (ROI)

Return on investment (ROI) is a financial metric used to evaluate the effectiveness of an investment relative to its cost. ROI can be applied to many metrics such as revenue, profit, etc. and is calculated by dividing the net impacted generated from the investment by the total investment cost, often expressed as a percentage. A positive ROI indicates that the investment has generated more value than its cost, helping businesses assess the success of marketing campaigns, product launches, or other initiatives.

Related terms

Customer acquisition cost (CAC)

Customer lifetime value (CLV)

Incrementality

Key performance indicator (KPI)

Marketing effectiveness

Mix media modeling (MMM)

Multi-touch attribution (MTA)

Sales compensation

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