Three Questions, Three Answers
Every ad campaign hides three distinct questions: Did this ad make me money? How much revenue came back for every lira I spent? And how much did it cost me to win one customer? ROI, ROAS, and CPA are the answers to exactly these three questions. They are not interchangeable; each one illuminates a different corner of the picture.
ROI — Did I Make a Profit?
ROI (Return on Investment) shows whether the money you put into advertising comes back as net profit. The formula is simple: subtract cost from gain, divide by cost, multiply by one hundred. For example, you spend 1,000 TL on ads and earn 4,000 TL in profit from them. Formula: (4,000 − 1,000) ÷ 1,000 × 100 = 300% ROI. That means 3 lira of net profit for every lira spent. If ROI falls below zero, the ad is costing you money.
ROAS — Is the Ad Generating Revenue?
ROAS (Return on Ad Spend) measures how many liras of revenue come back for every lira spent on ads. Note: revenue is not profit. You spend 500 TL and generate 2,500 TL in sales. ROAS = 2,500 ÷ 500 = 5. That is 5x ROAS. Is that good? It depends on your profit margin. If your margin is thin, even a 5x ROAS can leave you in the red. That is why ROAS alone is not enough; it must be read alongside ROI.
CPA — How Much Does One Customer Cost Me?
CPA (Cost Per Acquisition) shows how much you spend to win one customer, form submission, or phone call. Formula: total ad spend ÷ number of conversions. If you spend 2,000 TL and get 20 form fills, CPA = 100 TL. Does that 100 TL make sense? If you earn an average of 800 TL profit from that customer, absolutely. But if you only earn 60 TL per customer, you are losing 40 TL on every sale.
- ROI → Did I gain or lose net profit? (profit-focused, expressed as a percentage)
- ROAS → How many liras of revenue did each lira of spend return? (revenue-focused, read as a multiplier)
- CPA → How much did one conversion cost me? (efficiency-focused, expressed in currency)
- High ROAS but low ROI: revenue exists, profit does not — revisit product margin or ad costs
- Low CPA is good, but not sufficient alone — the lifetime value (LTV) of the acquired customer must also be factored in
You cannot manage what you cannot measure. The same rule applies to advertising: without knowing which metric to watch, you cannot manage your budget correctly.