What is the difference between ROI and ROAS in search arbitrage?
ROAS is revenue divided by ad spend. ROI is profit divided by ad spend. If you spend $500 and earn $600, ROAS is 120% and ROI is 20%. A ROAS of 100% means you only got your money back, which is an ROI of zero. Arbitrage teams usually talk in ROI because the margin is what they live on.
The two are the same information with a different zero point: ROI equals ROAS minus 100 percentage points when ad spend is the only cost counted. Traffic platforms prefer ROAS. Meta's and Google's bidding tools ask for a Target ROAS, so a buyer who wants a 15% return sets a target near 115%, then adds headroom for clawbacks.
Neither figure includes overheads unless you put them in. A campaign at 110% ROAS is losing money once tracker fees, content, salaries and the cost of financing the cash-flow float are counted. A daily profit and loss that includes those lines is more honest than either ratio.