Return on Investment (ROI) is the most widely used metric for judging whether money spent on a campaign, a piece of equipment, or a project paid off. It strips away the dollar amounts and expresses the result as a single percentage, which makes it easy to compare completely different kinds of spending — a $500 ad campaign and a $50,000 piece of machinery can both be scored on the same scale.
ROI has one well-known blind spot: it ignores time. A 50% ROI earned in one month is a very different result from a 50% ROI earned over five years, which is why marketers and investors often also look at annualized ROI — the same return normalized to a 12-month period — when comparing investments with different holding periods.
ROI also says nothing about risk. A high-ROI investment that could just as easily have lost money is not automatically better than a lower, more reliable return. Use ROI to compare similar bets, not to replace judgment about how likely each outcome actually was.