What Is ROAS & How Do You Use It?

A ROAS calculation is simple and straightforward if you know your costs for the specific campaign or advertising as well as your revenue from the campaign.

When calculating ROAS, divide your revenue by your marketing costs, as shown in the illustration below.

As seen in the above image, the formula is quick and easy to calculate what the return is from the company’s investment. 

If you spend THB 100 on advertising and have a turnover of THB 1,000 your ROAS will be 1000%, implying that you have received a return that is 10 times the initial investment.

As a result, one can easily obtain an overview of the money spent on advertising and marketing. It provides insight into the value of the marketing strategy you use to optimise the website.

Depending on the company, ROAS must be tailored to each individual company or industry, as in some cases, a ROAS of 200 percent may be acceptable, whereas in others, a ROAS of 1000 percent is required to achieve profit.

As a result, there is no correct or wrong on what constitutes a good percentage.

There are various perceptions of what makes sense in a given business based on a company’s costs and profit margin. So, depending on what the company trades or provides, the acceptable turnover value varies.

Measurement tracking and ROAS are important, and they are not always expensive or time-consuming to investigate. You can, for example, use free tools like Google Analytics & Facebook Ads Manager to take a closer look at your conversions and revenue, which can provide you with concrete figures on how a campaign performed. This information can then be used in the calculation of ROAS.

Of course, in order to determine whether a campaign was successful, you must always remember to define your goals from the beginning. After all, it is not always the financial objectives that drive success. You may have also defined your goals in terms of increased visibility, increased traffic, increased publicity, and a variety of other goals.

However, financial targets are often the foundation of campaign ads and this is where ROAS is frequently used.