Return On Advertising Spend (ROAS)

What is Return On Advertising Spend?

Return On Advertising Spend (ROAS) measures the revenue earned for every dollar spent on advertising.

How is Return On Advertising Spend (ROAS) used?

This metric spotlights the direct impact of ad expenditure on sales generation. It provides insights into the profitability of ad campaigns and helps to optimise marketing budgets by understanding how ad spend translates into sales. It's important for assessing campaign performance, especially when experimenting with different channels and messaging. It aids in allocating budgets towards the highest-yielding ads.

How to calculate Return On Advertising Spend (ROAS)

To calculate ROAS, divide the revenue attributed to your ad spend by the cost of your ads.

Best Practices

Make sure to consider indirect costs associated with ad campaigns, including creative, software, and management expenses. Effective advertising (high ROAS) can lead to a lower CAC, as more customers are gained per dollar spent.

Common Misconceptions

ROAS is not necessarily immediate. Some campaigns, especially those aimed at brand building, might have a long-term impact that is not immediately reflected in ROAS. Also, ROAS doesn't inherently consider LTV, which can lead to undervaluation of campaigns with high-value, long-term customers.

FAQs

Supported Integrations

Get this metric directly out of one of our supported integrations.

Google Analytics

Comprehensive web analytics service for tracking and reporting website traffic and user behaviour.

Hubspot

Integrated marketing and CRM platform offering SEO, content management, and customer engagement tools.

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