Return on Ad Spend (ROAS) Calculator
Determine the effectiveness and profitability of your advertising campaigns by calculating your return on ad spend.
Calculation Results:
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Return on Ad Spend (ROAS) is a marketing metric that measures the amount of revenue earned for every dollar spent on an advertising campaign. It is one of the most important indicators of an ad campaign's performance, helping businesses understand which campaigns are profitable and which are not. Unlike other metrics that might measure clicks or impressions, ROAS directly links advertising costs to revenue, providing a clear picture of financial effectiveness.
The ROAS Formula
The formula to calculate ROAS is straightforward and powerful:
ROAS = Total Revenue from Ads / Total Ad Spend
For example, if you generated $10,000 in revenue from an ad campaign that cost you $2,000, your ROAS would be 5 ($10,000 / $2,000). This is often expressed as a ratio, 5:1, meaning you earned $5 for every $1 you spent.
How to Use the ROAS Calculator
- Enter Total Revenue from Ads: Input the total revenue directly attributable to your advertising campaign. This requires accurate tracking, often through analytics platforms like Google Analytics or the ad platform's own conversion tracking.
- Enter Total Ad Spend: Input the total amount of money you spent on the campaign. This includes not just the ad clicks but also any management fees or costs associated with creating the ad content.
- Calculate ROAS: Click the "Calculate ROAS" button to see your results, which will show your return as both a dollar value and a ratio.
Example Calculation
Let's say an e-commerce store runs a Facebook Ads campaign to promote a new line of products.
- Total Ad Spend: $1,500
- Total Revenue from Ads: $7,500
Using the formula:
ROAS = $7,500 / $1,500 = 5
The result is a 5:1 ROAS. This indicates a highly successful campaign, as the business generated five times its advertising investment in revenue.
What is a Good ROAS?
A "good" ROAS varies significantly by industry, business model, and profit margins. While there's no universal benchmark, a common target for many businesses is a 4:1 ratio ($4 in revenue for every $1 in ad spend). This often provides a healthy margin to cover not just the ad spend but also the cost of goods sold (COGS) and other operational expenses, leaving a solid profit.
- Below 3:1: May require re-evaluation. Depending on your profit margins, you might be breaking even or losing money.
- 4:1 to 5:1: Generally considered a good, healthy return.
- Above 6:1: Often indicates a very successful and highly optimized campaign.
ROAS vs. ROI
It's important not to confuse ROAS with Return on Investment (ROI). ROAS measures the gross revenue generated per dollar of ad spend. ROI, on the other hand, measures the net profit generated after accounting for all costs, including ad spend, COGS, shipping, and other overheads. ROAS is a measure of ad campaign efficiency, while ROI is a measure of overall business profitability.