What is ROAS? The guide to improving your return on Ad spend

As you know that pay-per-click is an important part of seo services these days that’s why I am writing this. Are you looking for ways to improve your pay-per-click advertising campaigns? The first step towards improving your campaigns is to keep track of their effectiveness. And getting clicks is only half the battle.

If you do not generate a profit with these ads, they are not effective. Although there are many statistics that you can use to measure your ad effectiveness, measuring ROAS is the most accurate way to determine whether your ads are truly worth the investment.

If you are not familiar with PPC advertising yet, you may wonder: what is ROAS? This is a question we are asked a lot at LYFE Marketing.

ROAS, or return on ad spend, is a way to match the amount you spend on a particular PPC ad campaign on the amount of revenue generated by that campaign. In other words, you can see how much you get from a campaign when you put in X amount.

If you want to improve the return on ad spend, you first need to know what ROAS is and how it works. Below we will discuss the basic principles, while also providing you with a comprehensive list of strategies that you can use to get more out of your advertising budget.

What is ROAS?

ROAS is an abbreviation for the return on advertising costs. This is a value that marketers use to determine how much revenue dollars they receive for each dollar spent on advertising.

In essence, it helps you determine how effective your online ad campaigns are so that you can determine whether your advertising budget is being used most effectively.

What is ROAS? Only one of the most important online marketing statistics in the world!

In many ways ROAS is very similar to another important statistic that we use in marketing: ROI (return on investment) or ROI.

ROI is used to evaluate the overall effectiveness of all your marketing efforts and their impact on your business results. On the other hand, ROAS is used to evaluate the effectiveness of one specific advertising campaign.

If you want to determine which ad campaigns are worth your time and money, you can use ROAS to identify the most profitable campaigns. You can also determine whether changes you've made to your ads, such as targeting changes or content updates, are actually working to improve the overall effectiveness of your ads.

How to calculate the answer to what is ROAS

Now that you know the answer to the question: what is ROAS, let's talk about how you can calculate it for your advertising campaigns. First you need to track the conversions and sales information for your ad campaigns.

Fortunately, most paid advertising platforms make this a simple process.

For example, if you track the ROAS of Google Search campaigns, you can get the information you need on the Ad group’s page on the main dashboard. Once you collect the conversion and sales data from Google Ads, you can plug it into the ROAS formula below to calculate your return on advertising revenue.

Dashboard for Google ads Get the information you need to measure ROAS through the Google Ads dashboard.

Some marketing statistics are difficult to calculate, but ROAS is not one of them! Once you have the numbers you need, you can plug them into the following formula to calculate your return on ad spend:

(Yield - costs) / costs

Before you start connecting numbers in the formula, consider which campaign you want to evaluate.

Once you've decided, you'll take the total revenue generated from this ad campaign and deduct the costs of completing the addition to earn your total campaign revenue.

After you've calculated the total campaign revenue, you only need to share it with your ad spend to get the return on ad spend. ROAS calculation remembers this formula and uses it to track your ROAS for Google PPC ads.

Why and how to use ROAS

So far, we've gone through what ROAS is and how you can measure it. But we have not really discussed why it matters or how you can use it to improve your online advertising campaigns.

ROAS is important because it helps you determine how a particular advertising campaign contributes to the business results of your brand.

Without this, you can simply guess whether the ad generates more revenue than the costs.

When it comes to how you can use ROAS, this statistic provides a lot of insight into many different parts of online marketing, including strategy, marketing direction and budget.