Why is ROAS an important metric?

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For example, if you spent $500 on an ad campaign and earned $1,250 in revenue, your ROAS would be 2.5. In this case, the higher the ROAS, the more profitable your ads are.

 

ROAS is a key metric for companies to run ads and is the primary method for calculating advertising profitability. By evaluating the extent to which your ads contribute to final revenue, you can share this data with other members of your team and use it as a basis for expanding your marketing budget.


What is considered a good ROAS?
As with CPA, the quality of your ROAS score depends on a wide range of factors, from profit margins to industry. However, most companies aim for a 4:1 ratio, or $1 in revenue for every $4 spent on advertising. But keep in costa rica telegram number database mind that the average ROAS score is only 2:1, or $1 in revenue for every $2 spent.


What is Return on Investment?
 

ROI or “Return on Investment” is not a concept unique to advertising, but a global metric used to calculate the final revenue after taking every cost into account. In terms of every cost, this means that in addition to your investment in marketing, you must also consider human resource costs, technology costs, etc.

 

*Note that ROI can also be used to measure the total revenue from advertising. ROI is still different from ROAS because ROAS measures the revenue from the advertising campaign, while ROI is the total revenue from advertising.

 

Return on Investment Formula
(ROI = Net Income ÷ Total Investment Cost) x 100%

 

This is a very simplistic example, but if you opened a lemonade stand in the summer and spent $5 collecting the tools (lemons, poster board, plastic cups) and made $35 by the end of the day, your ROI was 500%.