What is ROAS in plain English?
Last week I took a Google Analytics course and received my Google Analytics Individual Qualification (GAIQ).
In this blog, I will share in plain English,
What Is Return On Ad Spend (ROAS)?
Return On Ad Spend or ROAS is a measurement or metric which measures the revenue that's generated compared to every dollar spend on an advertising campaign.
As an example, if you earn $10 for every $1 spent on an advertising campaign. That means your ROAS for that campaign is 10:1, which is super excellent. If you are getting this, PM me because I want to learn what you did to get that ROAS.
Therefore, ROAS is a measurement on the effectiveness of a specific ad campaign.
Do not confused ROAS with your overall Return On Investment (ROI).
I know what you are thinking now...
What's a good ROAS?
Well, a good ROAS is typically around 3:1. This means $3 earn for every $1 in Ad spend.
If you are doing more than $3, that is good.
If you're barely breaking even, it might be time to review the accuracy of your metrics and evaluate your ads and bidding strategy.
Note that there may be other goals besides revenue. Lead generation, awareness, brand building and market research are some ad campaigns might not result in revenue. In this case, a lower ROAS makes sense.
There are many moving parts in an ad campaign. Some considerations include:
- Your ad headline (title)
- Your ad copy
- Alignment to target audience
- Effectiveness of your landing page
When starting out, you may want to note that sample sizing and minimum ad spend are necessary for meaningful results.
Therefore, you should not loose sleep over it.
If you are planning on using paid ads, the first step is knowledge. Acquire the knowledge and learn so you can implement more effectively.
Let me know below if you enjoy this simple primer on ROAS.
Enjoy your weekend, my friends.