For any business, calculating Return On Ad Spend (ROAS) is a key element. It drives business decisions related to marketing and advertising.

ROAS is a Key Performance Indicators (KPI) that play a role in measuring ad campaign success. It is mostly used by PPC Specialists & Digital Marketing Executives.

Despite being an Important Element In Advertising, many marketers still don’t have enough ideas about ROAS. Especially the beginners.

Questions like, What is ROAS? How to calculate ROAS? What’s the difference between ROAS and ROI? When should you use them? All these questions will be covered in this blog post.

Plus, PPC Managers at NME Digital Agency will share 3 practical tips to improve ROAS of both Google and Facebook Ad Campaigns.

Let’s start with understanding the Return-On-Ad-Spend (ROAS) with an example.

Understand ROAS With Example

ROAS is one of the Key Performance indicators in digital marketing. It is the revenue generated for every dollar spent on advertising. It showcases how the campaign is performing and helps businesses assess profitability and overall performance.

For example, the ROAS of 4:1 means that you are generating $4 on every $1 spent on an advertising campaign. This key metric helps you make informed decisions about where to allocate the budget for greater impact.

Low ROAS can indicate areas you need to optimise in these crucial elements of the campaign, such as ad copy, creative, and audience targeting.

On the other hand, better ROAS means these campaign elements are working well, which signals to increase the ad spend.

Comparing ROAS of different advertising channels helps you analyse the better-performing channels as well. So you can allocate advertising budget better way.

Remember: Things like product pricing, overall funnel health (email follow-ups, shipping, customer service), and offer strength also impact ROAS.