Question 1

What Is Facebook Return on Ad Spend (ROAS)?

Accepted Answer

Facebook return on ad spend (ROAS) is a metric to calculate how much money you make from each dollar spent on advertising.

It gives you an analysis of output gained against the investment in your Facebook ads.

Question 2

How is ROAS different from ROI?

Accepted Answer

ROI (Return On Investment) is the revenue generated against the overall investment. It includes the expenses on people, tools, along with the expenses on your ads.

Whereas , ROAS is the revenue you generate against the amount only spent on ads.

ROI =	Net Profit	x 100
	Net Spend

Revenue generated against the overall investment on tools, people,

Includes expenses on people, tools and ads

Determines the overall profitability

ROAS =	Revenue Generated from Ads	x 100
	Advertising Spend

Revenue generated against only the ad expenditure

Includes expenses on people, tools and ads

Does not take into account any expenses except for ads

Gives you insights on your ad performance (like number of impressions /clicks/ revenue)

To better understand the difference between the 2, let us go through an example :

You spend $100 on ads and generate a revenue of $200. The amount spent on other things like software, personnel, etc is $150. Therefore,

ROI =	-$50	= -20%
	$250

This indicates a loss of 20 %

ROAS =	-$200	= 200%
	$100

This indicates a 200% return

So if you measure your returns using ROAS, your ads are very effective. However in reality, the company is suffering a loss of 20%.

Hence, a Business needs to have both metrics to analyze the performance accurately.

All in all, use ROI to check your profitability, and if you find Facebook ads to be one of the contributors to your success, then focus on improving your ROAS.

Thankfully, there are ways to increase the returns on your advertising dollars spent on Facebook.

Keep these tips in mind as you work to improve your Facebook ROAS, and watch those profits soar!

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