{"id":14451,"date":"2022-12-26T21:57:17","date_gmt":"2022-12-27T02:57:17","guid":{"rendered":"https:\/\/onecommerce.io\/blog\/?p=14451"},"modified":"2023-04-20T04:37:01","modified_gmt":"2023-04-20T08:37:01","slug":"return-on-ad-spend","status":"publish","type":"post","link":"https:\/\/onecommerce.io\/blog\/2022\/12\/26\/return-on-ad-spend\/","title":{"rendered":"Return On Ad Spend (ROAS) – Formula, Benchmarks & Tips"},"content":{"rendered":"

Given the fiercely competitive eCommerce industry, if you\u2019ve just embarked on your selling journey, running ads is a must, not a plus. And to run ads in the most cost-efficient ways, you must track your <\/span><\/i>Return On Ad Spend<\/a> (ROAS<\/i><\/b>).<\/span><\/i><\/p>\n

By calculating your ROAS properly, you\u2019ll have a clear picture of your performance marketing – whether you\u2019re on the right track and investing in the right ad channel or not.<\/span><\/i><\/p>\n

So, in this article, we\u2019ll show you everything you need to know about Return on Ad Spend, from <\/span><\/i>definition, formula, benchmarks, and tips to improve your ROAS<\/i><\/b>!<\/span><\/i><\/p>\n

Let\u2019s dive right in!<\/span><\/i><\/p>\n

How to calculate Return On Ad Spend?<\/b><\/h2>\n

Return On Advertising Spend (ROAS) is a marketing indicator that gauges the success of your digital advertising campaigns. The formula to calculate ROAS metric is simple as shown below:<\/span><\/p>\n

Formula:<\/span> ROAS (%) = (Gross Revenue From Ad Campaign \/ Costs for Ad Campaign) * 100%<\/strong><\/span><\/p>\n

For instance, if you invest $5,000 for a Google ad campaign, and after 1 month, you convert total sales of $10,000, your ROAS for that month would be $10,000 \/ $5,000 = 2:1. And is 2:1 ratio is a good ROAS? Well, it depends – which we\u2019ll discuss later below!<\/span><\/p>\n

How to decide which ad channels get the most credit?<\/b><\/h2>\n

Most brands run ad campaigns on as many channels as they can to maximize their reach and meet their customers at every touch point, increasing their chances of converting.<\/span><\/p>\n

And here comes the tough part – calculating ROAS for all the ad channels that you\u2019re actively running. It means you have to attribute ad revenue to your ad channels properly, and there are actually various methods to do so.<\/span><\/p>\n

\"Return

Wondering how to attribute ad revenue properly for each of your ad channels?<\/p><\/div>\n

Take a clothing brand, for instance, this company runs 2 ad campaigns during BFCM – Facebook ads and Google shopping ads simultaneously.\u00a0<\/span><\/p>\n