How to Use an ROI Calculator to Measure Paid Advertising Success

Using an ROI (Return on Investment) calculator can help small businesses and tradespeople see exactly how profitable their paid ads are. The calculator asks for your total ad spend and returns and then computes your ROI percentage. Essentially, ROI shows how much profit (or loss) your ads generated relative to what you spent. For marketing, the formula is:

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ROI = (Revenue from Ads – Cost of Ads) ÷ Cost of Ads × 100%

This means ROI is the profit you made divided by what you invested, converted into a percentage. A positive ROI means the campaign made money; a negative ROI means you spent more than you earned. For example, spending £500 on ads and earning £800 results in an ROI of (800–500)/500×100% = 60%.

In practical terms, a 60% ROI means you earned £1.60 for every £1 spent, with £0.60 of that being profit. Calculating ROI helps you quickly judge if an advertising effort paid off and guides better budgeting. Small businesses especially need to prove marketing’s value fast, so ROI is a critical metric.

ROI calculators let you break down campaign costs and returns easily. Simply enter your total ad spend and any related costs, plus the revenue you got from the campaign. The tool then shows your ROI percentage instantly. For example, a local cafe owner can plug in the money spent on Facebook ads and the resulting sales to see if the campaign made a profit. This clear snapshot helps even non-experts understand their ads’ performance.

Enter Your Campaign Costs

First, in the ROI calculator enter your total marketing investment – that is, all the money spent on the advertising campaign. This should include not only the ad platform spend (Google Ads, Facebook Ads, etc.) but also any extra fees. For instance, you might have agency or freelancer costs for ad creative, software subscriptions, or other campaign expenses. Enter the full cost in GBP (e.g. £600). Including every related expense gives you an accurate picture of how much you really invested.

Enter Your Returns (Revenue or Profit)

Next, input the total return from that campaign. This is usually the revenue generated by the ads (sales that resulted from clicking the ad). Some businesses prefer to use profit (revenue minus product costs), but be consistent with your choice. For example, if you earned £800 in sales, enter £800 as your return. The calculator will use this number to measure what you got back from your spend.

(Optional) New Customers and Customer Value

Some ROI calculators (and many spreadsheet ROI tools) include fields for new customers and customer value. If your tool has these, enter how many new customers came in from the ads and the average value of each.

Customer value means the average revenue you expect from a customer – either per transaction or over their lifetime. For example, if 3 people bought a £300 service after seeing your ad, you’d enter 3 for new customers and 300 for customer value, giving a total return of £900. Including customer value helps capture repeat business: you might use the lifetime value if customers return for future purchases. This shows how ads not only drive one sale but potentially many over time.

Calculate and Interpret Your ROI

Once all inputs are entered, click Calculate ROI (or the equivalent button). The tool will display your ROI percentage. For example, if you entered a £500 cost and £800 return, the calculator shows 60% ROI. That means for every £1 you spent on ads, you earned £1.60 back, with £0.60 being pure profit. If the number is positive, your campaign made money. If it’s negative, you spent more than you earned – showing a loss. You can quickly run different numbers: try increasing returns by 10% or reducing costs to see how ROI improves.

Pro Tip: Be sure to include every related cost in the “total spend” field – this includes design or production costs, agency fees, and any subscriptions. Leaving costs out will overstate your ROI. Also, consider Customer Lifetime Value (CLV): if you expect new customers to buy again, multiply the number of new customers by their average lifetime revenue. This captures the full long-term return of your ad campaign.

ROI Calculator in Action: Examples

Example – Online Retail Campaign: A UK craft shop spends £500 on Facebook ads and earns £800 in sales from that campaign. The ROI formula gives (800–500)/500×100% = 60% ROI. In other words, the shop earned £1.60 for every £1 spent, with £0.60 profit per pound. This positive ROI shows the ads were a good investment.

Example – Local Tradesperson: A London plumber spends £600 on Google Ads and £150 on design/agency fees (total £750). The ads bring in 3 new customers, each worth about £500 in revenue. Total return = £1,500. The ROI is (1500–750)/750×100% = 100%. This means the plumber doubled the investment: for every £1 spent, £2.00 came back (earning £1.00 profit per £1) – a highly successful campaign. If the ROI were negative (say only £400 earned on a £500 spend), the tool would show –20%, meaning a loss of £0.20 per £1. Seeing the ROI percentage and what it means in pounds clarifies whether a campaign should be scaled up or rethought.

Pro Tip: Use the ROI calculator for comparisons and planning. Run the numbers for each ad channel separately (Google vs. Facebook, for example) to see which delivers the best ROI. You can also experiment: tweak the inputs to forecast results (e.g. what if sales rise by 10% or costs drop by 20%?). This kind of “what-if” analysis helps you make smarter decisions with your ad budget.

Improve Your Campaign ROI

Measuring ROI is the first step; the next is using that insight to improve your ads. For more tools, tips and guides, visit our Digital Marketing Resources page, which features our (free) Marketing ROI Calculator and other helpful resources. You can measure your current campaigns’ ROI in seconds and then explore guides on optimisation. If you’d like expert help improving your advertising ROI, feel free to get in touch – our team can advise on optimising your campaigns and stretching every marketing pound further.