ROI

ROI (return on investment) is profit divided by cost, expressed as a percentage. In traffic arbitrage it shows how much profit each dollar spent on clicks brought back. A positive ROI means the campaign made money, a negative one means it lost money.

All terms

The formula

ROI = (revenue − cost) / cost × 100%

Revenue is what the offer paid you. Cost is what you spent on traffic. The difference is profit.

Example. You spend $200 on clicks and approved conversions pay $260. Profit is $60, so ROI = 60 / 200 × 100% = 30%. If conversions pay only $150, profit is −$50 and ROI is −25%.

ROI vs ROMI vs ROAS

MetricFormulaNotes
ROI(revenue − cost) / costProfit relative to spend. 0% is break-even
ROMI(revenue − marketing cost) / marketing costThe same idea limited to marketing spend. Often used as a synonym for ROI
ROASrevenue / ad spendA ratio, not a percentage of profit. 1.0 is break-even

So ROAS 1.3 equals ROI 30%: ROI = (ROAS − 1) × 100%.

What goes into cost

For a fair ROI, count everything you paid for the traffic you measure: the ad spend, and if you want the full picture, also the domain, server and tool costs spread across the period. In the TDS.SO tracker, cost is the price of all clicks, bots included, and revenue is approved conversions only. Bots you did not filter therefore lower ROI, which is one reason to filter bot traffic.

How to measure it in TDS.SO

  1. Create an offer with {click_id} in its URL and attach it, with a traffic source, to a link.
  2. Set the click cost, either from the source parameter or as a fallback price on the link.
  3. Set up the postback on the affiliate network.
  4. Open Reports or Conversions to see revenue, cost, profit and ROI by date, country, device, offer or source.

ROI cannot be calculated without a click cost. The tracker is in beta; see analytics for the reports.

Questions

What is a good ROI in affiliate marketing?

Any ROI above 0% is profit, but how much you need depends on your margins, volume and risk. Judge ROI only after enough conversions that the number is not random.

Is ROI the same as ROAS?

No. ROAS is revenue divided by ad spend; ROI subtracts the cost first. They convert into each other: ROI = (ROAS − 1) × 100%.

Why can ROI look worse in the tracker than in the ad account?

Because the tracker counts the price of every click, bots included, and revenue only from approved conversions. Pending conversions raise ROI once they are approved.

Keep reading

Related

All terms
Term

Postback

A postback is a server-to-server request in which an affiliate network tells your tracker that a click converted, usually with the click ID and payout.
Term

Bot traffic

Bot traffic is non-human visits to your links: crawlers, scanners, link previews and scripts. It wastes budget and distorts conversion statistics.
Term

Split test

A split test sends parts of your traffic to different versions of a page or offer at the same time, so you can compare which one converts better.
Feature

Analytics

Feature

Traffic filtering

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