What is ROAS?
ROAS is short for Return on Ad Spend, meaning what you get back from the ad budget you invest. It is calculated by dividing the total revenue attributable to your marketing by the total ad spend for that marketing. Put more simply, ROAS is revenue / advertising costs.
When evaluating which channels and ads to prioritize in your marketing, ROAS is often a strong indicator of what works best for you and your business. Compare ROAS from previous marketing activities to see where you get the highest return on your investment.
ROAS example:
You have spent NOK 15,000 on advertising in one month. This month you sold 250 products at NOK 399 each. This gives a revenue of NOK 99,750 (excluding product costs). The ROAS calculation will then look like this:
In this case, you have a 665% return on what you have spent on marketing.
Frequently Asked Questions:
What is ROAS used for?
ROAS stands for return on ad spend and is used to measure the impact of your marketing. It shows how much you get back from the money you invest in digital advertising and other marketing activities.
How to calculate ROAS?
You calculate ROAS by dividing your revenue by your advertising costs. The formula looks like this: (Revenue / ad spend) * 100 = ROAS.
