Return on Advertising spend (ROAS)

The Return on Advertising spend (ROAS) isn’t reported by default by ad platforms like Facebook and Google or by Google Analytics, but is a useful derived or calculated measure that can be reported in Google Data Studio for example, which gives a great comparison of top-level of ad effectiveness by channel.

It is calculated as:

The total revenue generated for a specific marketing channel (like Google Ads or Paid Social) divided by the total spend on that channel.

A typical target might be $5 to $1, or £10 to £1.

It has the disadvantage that it doesn’t take profitability into account which is essential for retail sales for which Return on Investment (ROI) is a more suitable measure. However, where profit isn’t known, for example, in charity donations, it is a useful simple measure.

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About Smart Insights

Dr Dave Chaffey is co-founder and Content Director of digital marketing advice site Smart Insights. We’re a publisher and learning platform that helps our 150,000 active members in over 100 countries plan, manage and optimize their digital marketing activities by applying the actionable advice in our planning templates, guides and interactive e-learning tools.

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