How to measure ROI from TikTok and Instagram campaigns

TikTok and Instagram have evolved from experimental advertising channels into essential platforms for e-commerce brands. Together, they reach billions of users and drive significant revenue for online stores. But here's the problem: many store owners pour thousands of dollars into these platforms without truly understanding whether they're making money or losing it. Platform dashboards show impressive metrics like impressions, engagement rates, and click-throughs, but these vanity metrics don't pay the bills.

Measuring real ROI from TikTok and Instagram requires looking beyond surface-level metrics to understand actual revenue generated versus money spent. This guide walks you through the exact process to calculate and track ROI from these platforms, so you can make confident decisions about your social advertising budget.

💡 Understand the ROI formula for social advertising

Let's start with the basics. ROI (Return on Investment) is calculated as: (Revenue - Cost) / Cost × 100. If you spend $1,000 on ads and generate $3,000 in revenue, your ROI is ($3,000 - $1,000) / $1,000 × 100 = 200%. For every dollar spent, you made two dollars in profit above your ad costs.

However, e-commerce ROI gets more nuanced. You need to consider ROAS (Return on Ad Spend), which is simply Revenue / Ad Spend. In the example above, ROAS would be 3.0 or 3x. Many advertisers prefer ROAS because it's simpler: if you have 3x ROAS, you're making $3 for every $1 spent. Whether you use ROI or ROAS, the key is consistency in how you calculate and compare performance.

Don't forget to factor in your product costs and operational expenses when determining profitability. A 3x ROAS sounds great, but if your product costs and fulfillment eat up 70% of revenue, your actual profit margin is much thinner. Calculate your breakeven ROAS by dividing 1 by your profit margin. If you have a 40% profit margin, you need at least 2.5x ROAS to break even.

🎯 Set up proper conversion tracking

You can't measure ROI without accurate conversion tracking. Both TikTok and Instagram (through Facebook Ads Manager) require pixel installation on your website. The TikTok Pixel and Facebook Pixel track when visitors from your ads complete actions like viewing products, adding to cart, initiating checkout, and completing purchases.

For Shopify stores, install pixels through the app integrations or by pasting pixel code into your theme. For WooCommerce, use official plugins or Google Tag Manager. Test your pixel implementation using each platform's pixel helper tool to verify that purchase events are firing correctly. Without working pixels, you're flying blind—the platforms can't optimize for conversions, and you can't measure true ROI.

Complement pixel tracking with UTM parameters on all your ad links. Structure your UTMs consistently: utm_source=tiktok or instagram, utm_medium=paid_social, utm_campaign=your_campaign_name. This allows Google Analytics 4 to track conversions even when pixels miss them due to ad blockers or iOS privacy restrictions, giving you a more complete picture.

📊 Track the metrics that actually matter

Both TikTok and Instagram dashboards overwhelm you with dozens of metrics. Focus on the ones that directly impact ROI calculation. Here are the essential metrics to monitor:

• Total spend: The amount you've invested in ads during your measurement period

• Purchase conversions: The number of completed purchases attributed to your ads

• Conversion value: Total revenue generated from those purchases

• Cost per purchase (CPP): Total spend divided by number of purchases

• ROAS: Conversion value divided by total spend

Monitor these metrics at the campaign, ad set, and individual ad levels. A campaign might show strong overall ROAS, but drilling down might reveal that one ad set is incredibly profitable while another is losing money. This granular view lets you optimize by shifting budget toward winners and pausing underperformers.

⚖️ Compare platform data with your source of truth

Here's a critical point many advertisers miss: TikTok Ads Manager and Facebook Ads Manager will almost always report higher conversion numbers than your actual store data shows. This happens because of attribution windows, view-through conversions, and different tracking methodologies.

Always compare platform-reported conversions against your actual Shopify or WooCommerce revenue data. Use Google Analytics 4 as a neutral third party to verify numbers. Create a simple tracking spreadsheet with columns for date, platform, platform-reported revenue, GA4-reported revenue, and actual store revenue. This reconciliation reveals the truth about your campaigns.

Use platform data to optimize within the platform—testing creative, audiences, and placements. But use your actual store data or GA4 data to make strategic decisions about budget allocation between platforms. If TikTok Ads Manager claims 4x ROAS but your store data shows 2.5x, use the 2.5x number for decision-making.

🔍 Account for attribution challenges

Not all conversions happen immediately after clicking an ad. Someone might see your Instagram ad on Monday, think about it, then search for your brand on Google on Wednesday and purchase. Instagram deserves some credit for that sale, but last-click attribution gives all credit to Google.

Both TikTok and Instagram use attribution windows—typically 7 days for clicks and 1 day for views. This means if someone clicks your ad on Monday and purchases by Sunday, the platform counts it. In GA4, check Advertising > Attribution to see how different platforms assist in conversions even when they're not the final click.

For a more complete ROI picture, consider incrementality testing. Run occasional holdout tests where you pause one platform for a week and measure whether your total revenue decreases proportionally. If you pause Instagram ads that claim $10,000 in weekly revenue but total store revenue only drops by $6,000, the true incremental impact was $6,000, not $10,000.

📈 Create a systematic review process

Measuring ROI isn't a one-time task—it's an ongoing process. Establish a weekly or bi-weekly review where you examine performance across both platforms. Use a simple framework:

• What was our ROAS on TikTok and Instagram this period?

• Which specific campaigns or ad sets drove the best ROI?

• Are any campaigns performing below our breakeven ROAS?

• What changes should we make for next week?

Document your findings in a spreadsheet or analytics tool. Track trends over time rather than obsessing over daily fluctuations. ROI typically varies by day of week, season, and promotional cycles. Understanding these patterns helps you set realistic expectations and identify true performance issues versus normal variation.

Advanced e-commerce analytics platforms like Peasy automatically calculate ROI and ROAS across all your channels, including TikTok and Instagram, giving you clear comparisons without manual spreadsheet work. This automation saves hours each week and reduces calculation errors that can lead to bad decisions.

Measuring ROI from TikTok and Instagram doesn't have to be complicated. Focus on actual revenue versus spend, set up reliable tracking, compare platform data against your source of truth, and review performance systematically. With these foundations in place, you'll make data-driven decisions that improve profitability rather than chasing vanity metrics. Want to simplify ROI tracking across all your marketing channels? Try Peasy for free at peasy.nu and get instant clarity on what's actually driving revenue for your store.