Understanding Ad Loss and Profitability
One of the biggest mistakes media buyers and small business owners make is confusing ROAS (Return on Ad Spend) with ROI (Return on Investment). A Facebook or Google Ads campaign might report a 2.0x ROAS, leading you to believe it's profitable. However, if your Cost of Goods Sold drops your margins low enough, a 2.0 ROAS could actually be losing you money daily.
How this calculator works
This Ad Loss & Profit Calculator takes a holistic look at your numbers. Rather than just dividing Sales by Ad Spend, we factor in the actual cost of fulfilling those products (COGS). The logic is simple:
- Net Profit = Sales Revenue - Ad Spend - Total Product Costs
- ROI = (Net Profit / Ad Spend) * 100
By entering your data, you can instantly see if your campaigns are scaling your bank account, or slowly burning a hole in it.