From Dark and Darker Wiki
Further clarification from Sur, the added damage is applied to the dps, not the actual ticks. The actual dps is split into .1s ticks. So 12 dps equates to 1.2 per tick. This can be observed when shooting a dummy, because the ticks show up as 1. This means that RoD actually scales rather slowly, with it taking 20 dps to get 2 per tick, 30 for 3, and so on. Another thing to note is that true and add magic damage do not get increased by your magic power.