What is return on ad spend?

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Return on Ad Spend (ROAS)

What is ROAS?

Return on ad spend (ROAS) tells a marketer how much money they've made for every dollar spent on advertising, helping them to measure and optimize their ad campaigns' success.

How does ROAS work?

ROAS works by comparing the revenue generated from a specific advertising campaign to the cost of the campaign. This allows marketers to see how much money they are making or losing on their advertising campaigns.

Types of ROAS:

  • Campaign ROAS: This type of ROAS measures the overall performance of a specific advertising campaign.
  • Channel ROAS: This type of ROAS measures the performance of a specific advertising channel, such as search engine marketing, social media marketing, or display advertising.

How to measure ROAS:

ROAS is measured using the following formula:

ROAS = Total revenue generated / Total cost of advertising

Why is ROAS important to marketers?

ROAS allows marketers to:

  • Track the effectiveness of their advertising campaigns and make necessary adjustments to optimize results.
  • Compare the performance of different advertising campaigns and channels.
  • Set budgets for future advertising campaigns.
  • Allocate their marketing resources more effectively.

Who needs to know what ROAS is:

  • Performance marketer
  • Digital marketer
  • Paid search specialist
  • Social media marketer
  • Display advertising specialist
  • Ecommerce manager
  • Retail manager
  • Marketing manager
  • Agency owner
  • CMO

Use ROAS in a sentence: “There has to be a balance between the ad dollars we budget for and the value our brand realizes at the end of the day — that’s the essence of ROAS.”