What is ROAS (Return Of Advertising Spending)?

ROAS (Return On Advertisement Spending) is a KPI (Key Performance Indicator) that is used to determine media effectiveness. It can be calculated for online and offline media campaigns. ROAS can also focus on campaign elements such as Google AdWords Ad Groups or even individual keywords within PPC advertising.

Calculating the ROAS allows online marketeers to see whether their advertising budget generates sufficient revenue. It also allows search engine advertising professionals to tweak their PPC campaigns and maximize advertising results.

To calculate ROAS, take the revenue generated by a campaign or ad source and divide it by its media expenses. Both net and gross media expenses can be used, providing information on gross and net ROAS.

A ROAS higher than one means that the campaign is generating more revenue then expenses. When it is one, media expense equals revenue. ROAS is often used in combination with conversion attribution, enabling advertisers to maximize the ROI from their media.

Related marketing articles:

  • Conversion Optimization ServicesAB-test (definition) An AB-test compares the results from one media component with another and is commonly used to for conversion optimization.
  • Web Analytics ServicesKPI (Key Performance Indicator) Measuring campaign KPIs is an excellent way to determine the effectivity of your campaigns and media. Read all about KPI's here.
  • PPC Advertising servicesCPA (definition) CPA stands for Cost Per Action. It is the average amount of advertising expenditure that is needed to generate an action.

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