Definition – What is a Return on Ad Spend?
Return on ad spend (ROAS) is a ratio of gross revenue to advertising spent during a campaign.
It is a metric used to determine the effectiveness of advertising.
Formula – How to calculate ROAS
Return on Ad Spend = Gross Revenue ÷ Cost of Campaign
A company has a revenue of $45,000. The cost of the marketing campaign is $9,000.
ROAS = 45,000 ÷ 9,000 = 9
Sources and more resources
- Big Commerce – What is ROAS? Calculating return on ad spend – Some ideas on how to calculate return on ad spend.
- Nielsen – Benchmarking return on ad spend: Media type and brand size matter – Some metrics on return on ad spend in the marketing industry.