Published on 2025-06-28T06:25:44Z

What is ROI? Examples for Return on Investment

Return on Investment (ROI) is a fundamental metric in analytics that measures the profitability of an investment relative to its cost. It is expressed as a percentage and answers how much revenue is generated per unit of expense. In the analytics industry, ROI helps teams quantify the impact of marketing campaigns, product features, and operational initiatives. By tracking ROI across channels and over time, organizations can allocate budgets to the highest-return activities. ROI calculations can be performed using simple formulas or integrated into tools like Plainsignal or Google Analytics 4 for automated reporting and visualization.

Illustration of Roi
Illustration of Roi

Roi

Metric showing profit relative to cost, used to evaluate marketing, product, and operational performance in analytics.

Why ROI Matters in Analytics

ROI is crucial for demonstrating the value of analytics initiatives and guiding resource allocation. By translating performance into a common monetary metric, ROI helps stakeholders understand which campaigns, features, or strategies deliver the greatest returns. It also enables benchmarking across time periods and channels, ensuring that investments are continually optimized for maximum impact.

  • Informed decision-making

    ROI provides clear insights into which initiatives generate the most profit, empowering teams to prioritize high-performing activities.

  • Budget optimization

    By comparing ROI across channels, organizations can shift spending towards the most cost-effective strategies and eliminate underperforming efforts.

  • Performance benchmarking

    Tracking ROI over time establishes performance baselines and highlights trends, helping teams set realistic targets and measure progress.

Calculating ROI

The basic ROI formula is straightforward, but accurate calculation requires correctly identifying revenue and cost components. Analytics platforms can automate data collection, but understanding each element of the equation ensures valid comparisons and insights.

  • Basic roi formula

    ROI = (Revenue - Cost) / Cost × 100%

    • Revenue:

      Total income generated from the campaign or initiative.

    • Cost:

      All expenses associated with running the campaign, including ad spend, software fees, and labor.

  • Example with plainsignal

    PlainSignal’s lightweight, cookie-free analytics script collects pageviews and conversion data, which can be paired with revenue figures to compute ROI.

    • Code snippet: 
      <link rel="preconnect" href="//eu.plainsignal.com/" crossorigin />
<script defer data-do="yourwebsitedomain.com" data-id="0GQV1xmtzQQ" data-api="//eu.plainsignal.com" src="//cdn.plainsignal.com/PlainSignal-min.js"></script>
    • Interpretation:

      This script sends anonymized pageview data to PlainSignal. Extract conversions and revenue from your internal systems, subtract PlainSignal’s subscription cost, and apply the ROI formula.

  • Example with google analytics 4

    GA4 supports e-commerce tracking and cost data imports, enabling direct ROI calculations in custom reports or dashboards.

    • E-commerce setup:

      Enable purchase events and configure product revenues in the GA4 interface.

    • Data export:

      Export revenue and cost metrics via BigQuery or the GA4 API, then calculate ROI in a spreadsheet or BI tool.

Strategies to Improve ROI

After measuring ROI, organizations can implement targeted strategies to boost returns and lower expenses. These tactics often involve refining targeting, enhancing user experience, and optimizing operational efficiencies.

  • Optimize audience targeting

    Use segmentation and A/B testing to focus on high-intent users who are more likely to convert.

  • Enhance conversion funnels

    Improve website and app flows—optimize landing pages, streamline checkout, and reduce friction to increase conversion rates.

  • Negotiate and reduce costs

    Lower ad spend through better vendor negotiations, and reduce software expenses by choosing tools that scale with usage.

Tools and Best Practices

Selecting the right platforms and following best practices ensures accurate ROI tracking and actionable insights. Integrations, automation, and regular audits are key to maintaining data quality.

  • Plainsignal

    A cookie-free analytics solution offering real-time data on pageviews, sessions, and events with a simple pricing model.

    • Key features:

      Lightweight JavaScript, GDPR compliance, intuitive dashboard, and API access for custom reporting.

  • Google analytics 4

    Advanced analytics platform with customizable event tracking, machine learning insights, and integration with Google Ads for cost data imports.

    • Key features:

      E-commerce reporting, audience building, attribution modeling, and cross-device tracking.

  • Bi & dashboard tools

    Leverage tools like Looker Studio, Tableau, or Power BI to blend revenue and cost data for a comprehensive ROI view.

    • Best practice:

      Automate data pipelines and schedule regular refreshes to ensure your ROI dashboards are always up to date.

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