Question 1

What is ROAS and how is it calculated?

Accepted Answer

ROAS (Return on Ad Spend) measures revenue generated for every dollar spent on advertising. It's calculated as: ROAS = Revenue ÷ Ad Spend. A ROAS of 4x means you earn $4 for every $1 spent on advertising.

Question 2

What is a good ROAS?

Accepted Answer

A good ROAS depends on your profit margin and business goals. Generally, a ROAS of 4x or higher is considered good, but you need to account for profit margins. Use break-even ROAS to determine the minimum ROAS needed for profitability: Break-even ROAS = 1 ÷ (Profit Margin ÷ 100).

Question 3

What's the difference between ROAS and ROI?

Accepted Answer

ROAS measures revenue per dollar spent (Revenue ÷ Ad Spend). ROI measures profit per dollar invested ((Revenue - Cost) ÷ Cost × 100). ROAS focuses on revenue efficiency, while ROI focuses on profitability. ROAS is typically higher than ROI percentage.

Question 4

How do I calculate break-even ROAS?

Accepted Answer

Break-even ROAS is calculated as: 1 ÷ (Profit Margin ÷ 100). For example, if your profit margin is 25%, your break-even ROAS is 1 ÷ 0.25 = 4x. This means you need a ROAS of at least 4x to be profitable. Our calculator includes break-even analysis when you enter a profit margin.

Question 5

How do I use ROAS to compare campaigns?

Accepted Answer

Calculate ROAS for each campaign and compare the ratios. Higher ROAS means better revenue efficiency. However, also consider profit margins - a campaign with lower ROAS but higher profit margin might be more profitable. Use break-even ROAS to ensure campaigns are profitable.

ROAS Calculator - Return on Ad Spend

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