{"id":964,"date":"2022-02-25T09:57:50","date_gmt":"2022-02-25T09:57:50","guid":{"rendered":"https:\/\/blog.integrately.com\/?p=964"},"modified":"2023-04-13T10:44:20","modified_gmt":"2023-04-13T10:44:20","slug":"what-is-a-good-roas-for-facebook-ads","status":"publish","type":"post","link":"https:\/\/blog.integrately.com\/what-is-a-good-roas-for-facebook-ads","title":{"rendered":"What is a good ROAS for Facebook ads, How to Calculate it and Increase Your Returns"},"content":{"rendered":"\n<p>ROAS, or return on Ad spend, is a valuable metric to track when advertising on Facebook.&nbsp;<\/p>\n\n\n\n<p>By knowing your ROAS, you can determine whether or not your ads are profitable and make changes as required to increase your returns.<\/p>\n\n\n\n<p>There is one more metric called ROI, or Return on Investment used by many marketers.<\/p>\n\n\n\n<p>Lots of people use these terms interchangeably, however they are not aware that there&#8217;s a difference between the 2.<\/p>\n\n\n\n<p>So in this blog post, we will be discussing about :<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><p>What ROAS and ROI are,<\/p><\/li>\n\n\n\n<li><p>How to calculate them,&nbsp;<\/p><\/li>\n\n\n\n<li><p>Difference between them,&nbsp;<\/p><\/li>\n\n\n\n<li><p>What is a good ROAS for Facebook ads, and<\/p><\/li>\n\n\n\n<li><p>How to improve your returns&nbsp;<\/p><\/li>\n<\/ul>\n\n\n\n<p>If you follow the tips in this post, you can optimize your Facebook advertising campaigns for maximum profitability.<\/p>\n\n\n\n<p>Let&#8217;s start!<\/p>\n\n\n\n<div id=\"integrately-widget\"><\/div>\n<script src=\"https:\/\/embed.integrately.com\/widget?apps=facebook-lead-ads\"><\/script>\n\n\n\n<div id=\"what-Is-facebook-return-on-ad-spend-roas\" class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h2>What Is Facebook Return on Ad Spend (ROAS)?<\/h2>\n<p>Facebook return on ad spend (ROAS) is a metric to calculate how much money you make from each dollar spent on advertising.<\/p>\n<p>It gives you an analysis of output gained against the investment in your Facebook ads.<\/p>\n<\/div><\/div>\n\n\n\n<div id=\"how-do-you-calculate-facebook-roas\" class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h2>How Do You Calculate Facebook ROAS?<\/h2>\n<p>You calculate ROAS by dividing your total revenue by the cost of your ads:<\/p>\n<table class=\"default\" style=\"margin-bottom: 25px;\" cellspacing=\"0\" cellpadding=\"10\">\n<tbody>\n<tr>\n<td style=\"padding-right: 10px;\" rowspan=\"2\">ROAS =<\/td>\n<td style=\"border-bottom: 1px solid #272727; text-align: center;\">Total Revenue<\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\" align=\"center\">Ad Spend<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-968 size-medium\" src=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/formula-300x120.png\" alt=\"\" width=\"300\" height=\"120\" srcset=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/formula-300x120.png 300w, https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/formula.png 356w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>For example, if you are a Clothing brand that spent $25000 on Facebook ads for your Spring Sale. If you generated a revenue of $100,000 then, calculate your ROAS as<\/p>\n<p>\u00a0<\/p>\n<table class=\"default\" style=\"margin-bottom: 15px;\" cellspacing=\"0\" cellpadding=\"10\">\n<tbody>\n<tr>\n<td style=\"padding-right: 10px;\" rowspan=\"2\">ROAS =<\/td>\n<td style=\"border-bottom: 1px solid #272727; text-align: center;\">$100000<\/td>\n<td style=\"padding-left: 10px;\" rowspan=\"2\" align=\"center\">= 4x<\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\" align=\"center\">$25000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>It means you earned 4 times the amount you spent on your Facebook ads.\u00a0<\/p>\n<p>In other words, we can say that for every $1 spent, you are earning $4.<\/p>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-columns ctaApp has-background is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\" style=\"background-color:#fbe9dd\">\n<div class=\"wp-block-column is-vertically-aligned-center appIcon has-white-background-color has-background is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:120px\">\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/integrately.com\/images\/calculators\/calculator-icon.svg\" alt=\"\" width=\"60\" height=\"60\"\/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column ctaAppContent is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<p class=\"lg\">Check Whether Your Ads Are Profitable<\/p>\n\n\n\n<p class=\"sm\">Calculate Your ROAS (return on ad spend) now.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button ctaBtn\"><a class=\"wp-block-button__link has-white-color has-text-color has-background wp-element-button\" href=\"https:\/\/integrately.com\/calculators\/marketing\/roas-calculator\" style=\"background-color:#ff6b01\" target=\"_blank\" rel=\"noreferrer noopener\">Calculate ROAS Now<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n<div id=\"what-is-a-good-roas-for-facebook-ads\" class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h2>What is a good ROAS for Facebook ads?<\/h2>\n<p>There is no exact formula to determine a good ROAS because it varies from industry to industry.<\/p>\n<p>We categorize the industries into 2 types<\/p>\n<ul>\n<li>\n<p><b>Category 1: Who sell their products or services online and generate the revenue directly.<\/b><\/p>\n<p>For such industries as e-commerce, you can use the below formula to calculate your target ROAS:<\/p>\n<p>Target ROAS = Avg. Order Value\/CPA (Cost Per Acquisition) FB ads.<\/p>\n<p>For example, if a person&#8217;s average order value is $50 and it costs them $15 in advertising<\/p>\n<p>to acquire one new customer, then their target ROAS would be:<\/p>\n<p>Target ROAS = $50\/$15 = 333.33 or a triple return on ad spend.<b><i><\/i><\/b><\/p>\n<\/li>\n<li>\n<p><b>Category 2: It includes those who generate leads and further convert these leads through phone calls or email communication.<\/b><\/p>\n<p>For such industries, you need to calculate the ROAS differently by considering factors like:<\/p>\n<ul>\n<li>\n<p>Lead values, and<\/p>\n<\/li>\n<li>\n<p>Conversion rates<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Thus, there&#8217;s no one-size-fits-all answer to this question, as the ROAS you should aim for will vary depending on your industry and what you&#8217;re selling.<\/p>\n<p>But we can say that ROAS depends mainly on 3 factors:<\/p>\n<ul>\n<li>\n<p><b>R<\/b>evenue<\/p>\n<\/li>\n<li>\n<p><b>M<\/b>argins<\/p>\n<\/li>\n<li>\n<p><b>O<\/b>perating cost<\/p>\n<\/li>\n<\/ul>\n<p>However, a good rule of thumb is to shoot for a target ROAS that is at least twice your original investment.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1049 alignleft\" src=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/useroi1-300x169.png\" alt=\"\" width=\"300\" height=\"169\" srcset=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/useroi1-300x169.png 300w, https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/useroi1.png 610w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>So, if you spend $100 on Facebook ads, aim for a target ROAS of at least $200.<\/p>\n<p>Now that you understand what Facebook ROAS is, why it varies from industry to industry and how to calculate it, the next step is to improve your returns.<\/p>\n<\/div><\/div>\n\n\n\n<div id=\"how-can-you-increase-returns-on-facebook-advertising\" class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h2>How Can You Increase Returns on Facebook Advertising?<\/h2>\n<p>Here are a few ways to boost your ROAS:<\/p>\n<ul>\n<li>\n<p>It is important that you set <b>realistic and achievable<\/b> goals<\/p>\n<\/li>\n<li>\n<p><b>Effective ads<\/b> play an important role in any advertising campaign. If your ads are not effective, you will not make any money.<\/p>\n<\/li>\n<li>\n<p>Always<b> track the results<\/b> of your campaigns so that you can see which ones are profitable and which ones need improvement.<\/p>\n<\/li>\n<li>\n<p><b>Test, test, and test some more<\/b> &#8211;&nbsp; that&#8217;s the only way to know what works and what doesn&#8217;t&nbsp;<\/p>\n<\/li>\n<li>\n<p>If you have a profitable campaign, consider<b> increasing your budget<\/b> to increase your ROAS.<\/p>\n<\/li>\n<\/ul>\n<p>Use <b>Custom Audiences<\/b> to target people who are already interested in your product or service.<\/p>\n<\/div><\/div>\n\n\n\n<div id=\"why-does-return-on-ad-spend-roas-matter-with-facebook-ads\" class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h2>Why does return on ad spend (ROAS) matter with Facebook Ads?<\/h2>\n<p>Marketers use ROAS as one of the metrics to analyze their marketing campaigns.<\/p>\n<p>It matters so much when it comes to Facebook ads mainly for 2 reasons:<\/p>\n<ul>\n<li>\n<p>It gives insights into how much money you make from each dollar spent on advertising<\/p>\n<\/li>\n<li>\n<p>It gives you an analysis of how effective your ad campaign is<\/p>\n<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-columns ctaApps has-white-color has-text-color has-background is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\" style=\"background-color:#011240\">\n<div class=\"wp-block-column ctaAppContent is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<p class=\"has-text-align-center ctaAppsHeading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#f35a38\" class=\"has-inline-color\">8 Million+<\/mark> Ready Automations<br>For <mark style=\"background-color:rgba(0, 0, 0, 0);color:#f35a38\" class=\"has-inline-color itlAppCount\">750+<\/mark> Apps<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button ctaBtn\"><a class=\"wp-block-button__link has-white-color has-text-color has-background wp-element-button\" href=\"https:\/\/app.integrately.com\/signup\" style=\"background-color:#f35a38\" target=\"_blank\" rel=\"noreferrer noopener\">Try Integrately For FREE<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n<div id=\"how-is-roas-different-from-roi\" class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h2>How is ROAS different from ROI?<\/h2>\n<p>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.<\/p>\n<p>Whereas , ROAS is the revenue you generate against the amount only spent on ads.<\/p>\n<p><\/p>\n<div class=\"triggerActionContainer\">\n<div class=\"triggerActionCol\">\n<table class=\"default\" style=\"margin: 25px 0;\" cellspacing=\"0\" cellpadding=\"10\">\n<tbody>\n<tr>\n<td style=\"padding-right: 10px; text-align: center; font-size: 0.78em; line-height: initial;\" rowspan=\"2\">ROAS =<\/td>\n<td style=\"border-bottom: 1px solid #272727; text-align: center; font-size: 0.78em; line-height: initial;\">Net Profit<\/td>\n<td style=\"padding-left: 10px; text-align: center; font-size: 0.78em; line-height: initial;\" rowspan=\"2\" align=\"center\">X 100<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center; font-size: 0.78em; line-height: initial;\" rowspan=\"2\" align=\"center\">Net Spend<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4707\" src=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/roi-net-profit.png\" alt=\"\" width=\"294\" height=\"106\"><\/p>\n<p>Revenue generated against the overall investment on tools, people,<\/p>\n<p>Includes expenses on people, tools and ads<\/p>\n<p>Determines the overall profitability<\/p>\n<\/div>\n<div class=\"triggerActionCol\">\n<table class=\"default\" style=\"margin: 25px 0;\" cellspacing=\"0\" cellpadding=\"10\">\n<tbody>\n<tr>\n<td style=\"padding-right: 10px; text-align: center; font-size: 0.78em; line-height: initial;\" rowspan=\"2\">ROAS =<\/td>\n<td style=\"border-bottom: 1px solid #272727; text-align: center; font-size: 0.78em; line-height: initial;\">Revenue Generated from Ads<\/td>\n<td style=\"padding-left: 10px; text-align: center; font-size: 0.78em; line-height: initial;\" rowspan=\"2\" align=\"center\">X 100<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center; font-size: 0.78em; line-height: initial;\" rowspan=\"2\" align=\"center\">Advertising Spend<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-974\" src=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/RoasImg1-300x108.png\" alt=\"\" width=\"300\" height=\"108\" srcset=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/RoasImg1-300x108.png 300w, https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/RoasImg1-768x276.png 768w, https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/RoasImg1.png 908w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>Revenue generated against only the ad expenditure<\/p>\n<p>Includes expenses on people, tools and ads<\/p>\n<p>Does not take into account any expenses except for ads<\/p>\n<p>Gives you insights on your ad performance (like number of impressions \/clicks\/ revenue)<\/p>\n<\/div>\n<\/div>\n<p>To better understand the difference between the 2, let us go through an example :<\/p>\n<p>You spend $100 on ads and generate a revenue of $200. The amount spent on other things like software, personnel, etc is $150. Therefore,<\/p>\n<div class=\"triggerActionContainer\">\n<div class=\"triggerActionCol\">\n<table class=\"default\" style=\"margin: 25px 0;\" cellspacing=\"0\" cellpadding=\"10\">\n<tbody>\n<tr>\n<td style=\"padding-right: 10px;\" rowspan=\"2\">ROI =<\/td>\n<td style=\"border-bottom: 1px solid #272727; text-align: center;\">-$50<\/td>\n<td style=\"padding-left: 10px;\" rowspan=\"2\" align=\"center\">= -20%<\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\" align=\"center\">$250<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>This indicates a loss of 20 %<\/p>\n<\/div>\n<div class=\"triggerActionCol\">\n<table class=\"default\" style=\"margin: 25px 0;\" cellspacing=\"0\" cellpadding=\"10\">\n<tbody>\n<tr>\n<td style=\"padding-right: 10px;\" rowspan=\"2\">ROI =<\/td>\n<td style=\"border-bottom: 1px solid #272727; text-align: center;\">-$200<\/td>\n<td style=\"padding-left: 10px;\" rowspan=\"2\" align=\"center\">= 200%<\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\" align=\"center\">$100<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>This indicates a 200% return<\/p>\n<\/div>\n<\/div>\n<p>So if you measure your returns using ROAS, your ads are very effective. However in reality, the company is suffering a loss of <b>20%<\/b>.<\/p>\n<p>Hence, a Business needs to have both metrics to analyze the performance accurately.<\/p>\n<p>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.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1047 alignleft\" src=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/useroi-300x169.png\" alt=\"\" width=\"300\" height=\"169\" srcset=\"https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/useroi-300x169.png 300w, https:\/\/blog.integrately.com\/wp-content\/uploads\/2022\/02\/useroi.png 610w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>Thankfully, there are ways to increase the returns on your advertising dollars spent on Facebook.<\/p>\n<p>Keep these tips in mind as you work to improve your Facebook ROAS, and watch those profits soar!<\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>ROAS, or return on Ad spend, is a valuable metric to track when advertising on Facebook.&nbsp; By knowing your ROAS, you can determine whether or not your ads are profitable and make changes as required to increase your returns. There is one more metric called ROI, or Return on Investment used by many marketers. Lots<a class=\"moretag\" \n href=\"https:\/\/blog.integrately.com\/what-is-a-good-roas-for-facebook-ads\">Continue Reading&#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":1674,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[18],"class_list":["post-964","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-app-tips","tag-facebook"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is a good ROAS for Facebook ads, How to Calculate it and Increase Your Returns<\/title>\n<meta name=\"description\" content=\"Do the terms ROI and ROAS confuse you? No worries. 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