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.