Advertising
What is ROAS?
Also called: Return on Ad Spend
ROAS, or return on ad spend, is the revenue your ads bring in for every dollar spent on them. It shows whether a campaign pays for itself.
Return on ad spend, or ROAS, is the revenue attributed to your ads divided by what you spent on them. If every dollar of ad spend brings back four dollars in sales, the ROAS is four to one.
It is a quick way to judge a campaign, especially for ecommerce where sales are tracked directly. A higher ROAS means each ad dollar is producing more revenue. It helps you decide where to add budget and which campaigns to cut.
ROAS has a blind spot: it looks at revenue, not profit. A product with thin margins needs a much higher ROAS to be worthwhile than one with fat margins. For service businesses, leads must be connected to eventual sales. We tie ad data to real revenue so the number means something.
Example
An online shop checks which of its ad campaigns return the most sales per dollar and moves budget toward the winners.
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