When to Use ROI vs Other Marketing Metrics
ROI is a general-purpose return metric. For paid advertising specifically, use ROAS (Return on Ad Spend) โ it's faster to calculate and better for channel-level optimisation. For customer acquisition, use LTV:CAC. ROI is most useful for comparing heterogeneous investments: "Should we hire a content writer or buy more Google Ads?"
The key limitation of ROI: it ignores time value. A 100% ROI over 5 years is not as good as a 100% ROI over 6 months. Use annualised ROI when comparing investments of different durations.
100%+
Strong ROI threshold for marketing investment
Time
Key variable ROI ignores without annualisation
LTV:CAC
Better ROI metric for customer acquisition
ROAS
Better ROI metric for paid advertising channels