ROAS stands for Return On Advertising Spend. And if you invest in paid media, you need to know this metric.
You are certainly already familiar with the concept of ROI . But what about ROAS? Do you already track this metric in your Digital Marketing campaigns?
ROAS is an important KPI to understand whether your ads are generating revenue or just spending. Keep reading to learn more about the concept!
Understand what ROAS is
ROAS is the return on investment in advertising/advertising . It is through this that you will be able to measure the profit generated by your campaigns.
A low ROAS requires a review of the optimization canada phone number format of ads or even audience and products. A high ROAS may indicate an opportunity to increase investment and, consequently, sales or leads.
Although it also measures return on investment, ROAS and ROI are not the same thing. ROI is much more comprehensive and presents the return on marketing actions as a whole. ROAS, on the other hand, evaluates the return specifically and exclusively from paid campaigns.
The importance of tracking metrics
We always emphasize, here on the blog, that the results of Digital Marketing actions should not be based on guesswork or subjective impressions. But rather, on data and comparisons.
Therefore, monitoring ROAS will indicate whether and where your company may be losing money . And, based on this analysis, you can decide which campaigns should continue and which should be discontinued.
Furthermore, ROAS helps to optimize ads so that they are increasingly competitive. Not to mention the fact that the indicator will become an important reference for future calculations.
How to calculate ROAS
ROAS is the result of the revenue generated by ads divided by their cost.
If your company invests R$1,000 in a campaign and obtains R$3,000 in revenue, the result is a ROAS of 3 or 300%. In other words, the result obtained was very positive!
It is worth mentioning that there is no magic number for what would be considered a good number to achieve here. Everything will depend on several factors, such as the market, product positioning, among others.
To define the ideal ROAS, consider:
Your market of operation;
Your profit margin;
The cost-per-click value of your ads.
Finally, if your campaign ROAS is low, it may be a sign that it is time to review your campaigns. But remember to never analyze just one metric in isolation.