A lot of business owners run ads without ever calculating the actual return, which makes it impossible to know if the spend is working. Here's a straightforward way to figure it out.

The basic formula

ROI = (Revenue from ads - Ad spend) / Ad spend, expressed as a percentage. If you spent $1,000 on ads and it generated $4,000 in revenue, your ROI is 300%, meaning for every dollar spent, you got three dollars back on top of it.

What you need to track first

You can't calculate this without knowing three things: how much you spent, how many leads or sales came directly from the ads, and what those leads or sales were actually worth. This means conversion tracking has to be set up correctly before any of this math means anything.

Don't forget your actual margins

Revenue isn't the same as profit. If a $4,000 job has $2,500 in costs, your real return is based on the $1,500 profit, not the full $4,000. Calculating ROI off revenue alone can make a campaign look far more successful than it actually is.

Account for lifetime value, not just the first sale

If a customer typically stays with you for multiple visits or purchases over time, calculating ROI off just the first transaction understates the real value. A landscaping client worth $300 on the first visit might be worth $3,000 over several years, that's the number that should inform how much you're willing to spend to acquire them.

What counts as a good ROI

It varies heavily by industry and margin, but as a rough starting benchmark, most businesses want to see at least a 3:1 to 5:1 return before considering a campaign genuinely successful, though thinner-margin businesses may need higher ratios to stay profitable.

The bigger point

If you can't calculate this number for your own campaigns right now, that's the first thing to fix, before anything else about the strategy. Without it, every decision about the budget is a guess dressed up as a plan.

If you want help setting up proper tracking and figuring out your real numbers, that's part of what we do in a free audit. Book a call and we'll help you get the real picture.