Return on Ad or Advertising Spend (ROAS) helps marketers measure the effectiveness of an advertising campaign.
To calculate ROAS, do the following:
C = Cost of the advertising campaign, or the amount spent on advertising
R = Revenue that was generated as a direct result of that same campaign
ROAS = R divided by C (or R / C).
Why ROAS is important
ROAS is important because if helps marketers understand how their efforts impact the company’s bottom line. This allows marketers and the brands they work for make more informed decisions about where and how to invest in advertising and marketing.
Book: House of the Customer (2023) by Greg Kihlström