What is ROAS?
Is your advertising working? How would you be able to tell? You'll need to know your ROAS (Return On Advertising Spend). It is a digital marketing metric that measures the effectiveness of an online advertising campaign. ROAS can help you evaluate which digital marketing channels are working and how you can improve future ad spend.
Essentially, ROAS will help you figure out how much revenue you're getting for every dollar you spend on your advertising campaign.
For example, you decide to spend $2,000 on an online advertising campaign within a specific month. Within that month, you were able to track and prove the campaign brought in $10,000 worth of revenue. This would then calculate your ROAS ratio of 5 to 1 (or 500%) as $10,000 divided by $2,000 = $5.
You're making $5 for every $1 you spent on advertising. According to a 2015 study by Nielsen, the average ROAS across most industries hovers around 287% (or $2.87 for every $1 spent).