Return on Ad Spend (ROAS) Definition- What is Return on Ad Spend ?

Gross revenue generated for every dollar spent on advertising. (revenue from ad campaign / cost of ad campaign = ROAS)

Ad Spend Return Formula

Useful Links Google Ads Target ROAS Bidding

Return on Ad Spend Definition

Return on advertising spending (ROAS) is a marketing formula that measures the effectiveness of an advertising campaign. ROAS helps online businesses evaluate which methods work and how they can improve future advertising. The ROAS is therefore about the costs of advertising.

ROAS formula

Total conversion value - total costs / total costs

An example:

10 conversions have been realized with a value of € 50 each. The total conversion value then amounts to € 500. 100 clicks have been registered for which each click has been paid € 1.

The costs of the Ad campaign are then:

500 - 100/100 = € 4

It is therefore true that € 1 in costs provides € 4 extra.

By calculating the ROAS you get immediate insight into what a euro yields, but a disadvantage of the ROAS is that it does not measure the exact costs of the advertising investment.