How To Accurately Calculate ROAS?
If you’re looking to improve your return on ad spend (ROAS), it’s important to understand how to calculate it accurately. Luckily, the calculation is fairly simple and can provide valuable insights into the effectiveness of your advertising efforts.
It’s important to know your margins. ROAS figures can look amazing – until you find out you’ve just lost money for yourself (or worse, your client!). Not every business has ridiculously high margins. 90% of the businesses we work with have slim margins and the typical 4x ROAS that a lot of agencies push as their “gold standard” ain’t gonna cut it.
Casey Jones – Head of Marketing @ CJ&CO
To calculate ROAS, you first need to gather the necessary data. This includes the total revenue generated from your advertising efforts and the total amount spent on those ads. Once you have this information, simply divide the revenue by the ad spend to get your ROAS.
For example, let’s say you spent $100 on advertising and generated $200 in revenue. Your ROAS would be 2, as 200 divided by 100 equals 2.
Use our ROAS Calculator below
Keep in mind, a ROAS of 2 might be considered excellent for one industry, but average or terrible for another. Some industries may need ROAS figures of 10 or above.
Another key point to keep in mind is that ROAS should be calculated over a specific time period. This allows you to track the effectiveness of your advertising efforts and make any necessary adjustments.
In conclusion, calculating ROAS is a simple and effective way to measure the success of your advertising efforts. By gathering the necessary data and dividing your revenue by your ad spend, you can gain valuable insights and make informed decisions to improve your ROAS and maximize your return on investment.
*The information this blog provides is for general informational purposes only and is not intended as financial or professional advice. The information may not reflect current developments and may be changed or updated without notice. Any opinions expressed on this blog are the author’s own and do not necessarily reflect the views of the author’s employer or any other organization. You should not act or rely on any information contained in this blog without first seeking the advice of a professional. No representation or warranty, express or implied, is made as to the accuracy or completeness of the information contained in this blog. The author and affiliated parties assume no liability for any errors or omissions.