Marketing KPI formulas: ROAS, CPA and marketing ROI

Olamide Sule, founder of Dolphin Analytics: a digital analytics expert based in London delivering solutions for agency and in-house clients.

Every marketing KPI here comes down to one small sum, and we run these sums for agency and in-house clients most weeks before a reporting call. A ROAS calculator, a CPA formula, a marketing ROI calculation: each is a single line of arithmetic. The part that trips teams up is not the formula, it’s knowing which numbers to put into it. Here’s the reference we hand clients: every formula, a worked example, and the input that quietly breaks the result.

The examples below use round numbers in pounds so the arithmetic stays easy to follow.

Every marketing KPI formula, in one table

KPI	Formula	What it answers
ROAS	tracked revenue / ad spend	Revenue returned per unit of ad spend
CPA	ad spend / new customers	What each new customer costs to win
Marketing ROI (ROMI)	(revenue - marketing cost) / marketing cost	Profit return on marketing
Click rate (CTR)	clicks / impressions	How often an impression earns a click
Conversion rate	conversions / sessions	How often a visit becomes an action

Each row is worked through below, with the input that decides whether the answer is honest.

What’s the difference between a KPI and a metric?

A metric is any number you can measure; a KPI (key performance indicator) is the small set of metrics tied to a goal you have chosen to steer by. Click rate is a metric. It becomes a KPI only when hitting a target click rate is how you judge a campaign. Every KPI is a metric, but most metrics never become KPIs.

The practical test: if a number changing would not change a decision, it is a metric to monitor, not a KPI to report. Agencies drown clients in metrics; good reporting picks the few that move a decision and leaves the rest as diagnostics.

ROAS calculator: the return on ad spend formula

ROAS (return on ad spend) is tracked revenue divided by ad spend. It answers one question: for every pound you put into ads, how much revenue came back. It is the fastest KPI for steering live campaigns, because you can read it daily without waiting for margin data.

Worked example. A campaign spends 4,000 and generates 20,000 in tracked revenue. ROAS = revenue / spend = 20,000 / 4,000 = 5. Read it as a ratio: five in revenue for every one of spend, or 5:1.

ROAS says nothing about profit, only revenue. A 5:1 ROAS on a product with a thin margin can still lose money once cost of goods, shipping and fees come out. For the profit view you need marketing ROI, below. For when to steer by ROAS, ROI or POAS rather than how to compute them, see ROI vs ROAS vs POAS.

Cost per acquisition (CPA) formula

Cost per acquisition (CPA), sometimes called cost per action, is ad spend divided by the number of new customers or conversions won. It answers what each acquisition actually cost, which is the number that decides whether a channel can scale.

Worked example. The same 4,000 of spend wins 80 new customers. CPA = spend / customers = 4,000 / 80 = 50. Each new customer cost 50 to acquire.

A CPA is only useful next to two other numbers: average order value and margin. A CPA of 50 is excellent on a 300 order and painful on a 40 one. Count genuine new customers too, not repeat buyers an ad platform re-claimed, or the CPA will read far lower than the real cost of growth.

Marketing ROI and ROMI: the return calculation

Marketing ROI, often written as ROMI (return on marketing investment), measures profit against total cost, not just revenue against ad spend. The formula is (revenue attributable to marketing minus marketing cost) divided by marketing cost. It is the number a board wants, because it nets off the cost of running the marketing itself.

Worked example. Marketing brings in 20,000 of revenue from 4,000 spent: (20,000 - 4,000) / 4,000 = 4. Multiply by 100 to state it as a percentage, so this campaign returned four hundred per cent on the spend.

Two cautions. First, use gross profit rather than revenue when margins are thin, or ROMI overstates the return. Second, “revenue attributable to marketing” is the input that gets argued over, and it depends entirely on your attribution model. Marketing attribution models explains how the same sale gets credited differently depending on the model you pick.

Click rate formula: clicks over impressions

The click rate, or click-through rate (CTR), is clicks divided by impressions. It answers how often an ad or link that was shown actually earned a click, which makes it the first read on whether creative and targeting are landing.

Worked example. An ad served 60,000 times gets 1,200 clicks: 1,200 / 60,000 = 0.02. Multiply by 100 for the percentage: a click-through rate of two per cent.

A high click rate is not automatically good news. Clicks that never convert just cost money, so read the click rate next to conversion rate and CPA rather than on its own. A cheap click that never buys is more expensive than a dear click that does.

Which KPIs for a website actually matter?

For most marketing sites, a short list does the work: conversion rate, cost per acquisition, return on ad spend, average order value, and the click-through rate on the campaigns driving traffic. Add revenue and marketing ROI when you report to a board.

The mistake we see most is teams tracking dozens of metrics and steering by none. Pick the four or five that map to revenue, treat the rest as diagnostics, and put them in the reporting layer so the same numbers appear every week. For a smaller operation, the KPIs that matter for a small business narrows the list further.

The input that breaks every calculator: which revenue number

Feed a ROAS calculator the revenue your ad platform reports and the answer flatters you. Meta and Google Ads both count view-through and modelled conversions they cannot fully see, so their revenue figure runs ahead of what actually landed in your ecommerce or CRM system. GA4 sits in the middle, and even GA4 often records roughly 10 to 15% fewer orders than Shopify shows, from consent-blocked sessions, ad blockers and dropped events.

The rule we give clients: calculate ROAS, CPA and ROI from the revenue your business actually banked (Shopify, the CRM, the finance export), not the number the ad dashboard wants you to use. When the two disagree, the dashboard is almost always the optimistic one; why the ad platform overstates sales walks through where the gap comes from.

How we make the marketing numbers real

Dolphin Analytics sets up and fixes the tracking under these calculators for agency and in-house teams most weeks. A KPI is only as good as the data feeding it. On one private aviation client, we found $250,000 of Trade Desk spend had produced a single form submission, while $50,000 on Meta produced around 600 leads at $78 each, and recommended flipping the budget split. The formula was never the problem; the numbers going into it were.

Once the revenue and conversion data are trustworthy, every formula above starts telling the truth. If your ROAS or CPA looks too good to be true, or you are not sure which revenue number to trust, tell us what’s broken, or book a call.