Return on Ad Spend (ROAS)
(ROAS), is a marketing metric that measures the efficacy of a digital advertising campaign. ROAS helps online businesses evaluate which methods are working and how they can improve future advertising efforts.
How To Calculate Return on Ad Spend
Return on ad spend is calculated by dividing the amount of revenue from a specific campaign, by the ad spend for that specific campaign. This produces a percentage or ratio of returned ad spend.
Return on Ad Spend Formula
The formula for return on ad spend is as follows:
Revenue / Cost = ROAS
Return on Ad Spend Example
Jane has spent $1,000 on a given cohort of her Adwords campaigns. That campaign returned $5,000 in revenue to her business. Jane’s return on ad spend (ROAS) is 500% or 5:1.