ROAS Calculator

You've most likely heard the phrase "return on ad spend" (ROAS), a profitability measure that compares how well your marketing campaign is performing to how much money you spent to run it.

How to Calculate Return on Ad Spend (ROAS)

Calculate your Return on Ad Spend (ROAS) as

Here,

• ROAS: The percentage return on investment from advertising
• Amount Gained from Ads: The amount of revenue generated as a result of the ad campaign
• Amount Spent on Ads: The total amount spent on the ad campaign (i.e the amount spent on the ad network/ website for running the ad) . It does not include the cost of creating and managing the ads.

What is ROAS?

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

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

For example, if you spent $100 on Facebook ads and generated $200 in sales, then

How to Improve Your ROAS

Improve your ROAS with our simple tips!

• Realistic Goals: Set achievable goals that you can measure to track your ROAS progress
• Effective ads: Create effective ads that generate clicks and conversions.
• Measure results: Get insights of the profitable ads from your campaign and also the ones that need improvement.
• Test, test, and test some more: That's the only way to know what works and what doesn't
• Increase your budget: When your ROAS is high and you're making a good profit, then increase your budget to make even more money!
• Custom Audiences: Target people who are already interested in your product or service.
• A/B Testing: Experiment with different types of ads and target audiences to find what works best for your business
• Frequency & Relevance: Make relevant ads and ensure that they are seen by the right people

Is ROAS Enough to Gauge Profitability

A straight answer to the question is a big 'NO'.

ROAS only gives you insights into the effectiveness of your ad campaign.

But it is insufficient to determine the profitability. ROI (return-on-investment) helps here to a great extent.

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

Let us understand this with an example,

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

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 must consider 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.