How to use the retargeting ROI calculator
Retargeting shows ads to people who already visited you, so it always carries an incrementality problem: conversions from users who would have returned anyway get counted as results. This calculator first gives the reported ROI from spend, conversions and revenue per conversion, then takes an incremental share and shows incremental ROI separately.
Reported ROI can overstate performance because it includes those natural returns. It is common for one campaign to show positive reported ROI and negative incremental ROI, and in that case there is no case for raising the budget. The break-even incremental conversion count tells you the minimum number of genuinely new conversions needed to cover the spend.
This tool works on a revenue basis. To work on contribution margin instead, enter contribution per order in the revenue-per-conversion field rather than gross revenue. In categories with heavy returns, entering conversions net of cancellations gets you closer to reality.
Frequently asked questions
A holdout group that never sees the ads, compared against the exposed group, is the most reliable way. Without an experiment, subtract the natural return-conversion rate from a period when retargeting was paused to get a rough share.
Budget decisions should follow incremental ROI. Reported ROI includes conversions from people who would have come back anyway, so it tends to overstate performance.