The main difference between these metrics is that ROI is an indicator of the relationship between investment and profits in a global way, while ROAS shows the return on investment, but to evaluate campaigns and ads individually.
To understand this better, let's look at the ROI formula:
ROI = (income – investment) / investment*100
ROI takes into account total expenses, including campaigns, advertisementsdenmark whatsapp resource and other costs such as production, employees or agencies. It is an important indicator for a final evaluation and to measure the profits obtained from online and offline investment.
On the other hand, with ROAS we obtain the relationship between the amount invested and the profits achieved in each campaign, separately from any other expense.
How to Calculate ROAS
Formula
ROAS = (profits / advertising costs)*100
ROAS Target
Target ROAS is an average amount of conversions or revenue you expect to earn based on the money you spend on ads. It's a way of setting ad bids, most commonly used in Google Ads, to ensure you're spending your budget based on your goal.
Using a target ROAS is intended to achieve a higher number of conversions. Bids are automatically optimized and adapted during the auction.
ROAS is primarily used to quickly identify where to allocate budget and evaluate results for better future investment. It is a key indicator for small businesses.
Google Ads and ROAS
Target ROAS in Google Ads is a smart bidding strategy like Target CPA and Enhanced CPC.
It can be used for single actions or as a portfolio strategy across multiple campaigns. This feature is very convenient for online store ads.
Additionally, Google Ads offers a smart bidding simulator for Target ROAS, based on the auction data from the last week. There you can visualize the impact of the campaign with budget changes.