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No. A negative ROI just implies that the ratio of benefit/cost is less than one. If I incur a cost/investment of $100 but it creates value of $200 then I have a
by qeternity 6y ago
No. A negative ROI just implies that the ratio of benefit/cost is less than one. If I incur a cost/investment of $100 but it creates value of $200 then I have an ROI of 100%. If this same expenditure instead only produced $80 value then I would have -20% ROI as in the value I’m realizing from my investment is 20% less than the cost of the investment.
- alacombe 6y agoRatio can't be negative, they can either be above of below 1. What you are talking about is "$benefit - $cost", not "$benefit / cost".
- rocqua 6y agoWe tend to call most rations below 1 'negative'. Its technically wrong but most people get what you mean when you say it.
- ducttapecrown 6y agoPositive and negative are the right words on a log scale :D
- deleted 6y ago[deleted]
- ddulaney 6y agoROI is (net benefit)/(cost), where net benefit is (gross benefit - cost). Net benefit can be negative, making ROI negative if cost exceeds benefit. GP was using benefit as a shorthand for net benefit, which can certainly be negative.
- loeg 6y agoEven gross benefit could conceivably be negative, if the ads are bad enough! (I.e., a terrible ad might prevent a sale.)
- benjam47 6y agoRatio can't be negative, but ROI can. Positive ROI is the percentage of the ratio being 1 or higher. Negative ROI is the percentage of the ratio being less than 1. Or, from a "common sense" perspective, if I spent $1000 on advertising, and earned $100 in revenue from that investment, my ROI is definitely negative.
- jacob019 6y agoI would expect: ROI > 1 = profitable ad spend 0 < ROI < 1 = ad spend does not cover its cost ROI < 0 = losing money because of the ad spend (the ad is damaging to your brand)