ROAS stands for Return On Advertising Spend, a method to determine the effectiveness of an advertising campaign. With this method, a company or organization can determine which approach has the most effect and how the online marketing strategy can be improved.
How to calculate ROAS?
The calculation is quite simple. Suppose you realize 10 conversions within one month. The total value of this is $1,000. The ads you used to achieve these conversions cost you $200. The ROAS of this campaign is therefore: $1,000 / $200 = 5. In other words: for every dollar that you have put into this campaign, you have received 5 back as turnover. Expressed as a percentage, you have a ROAS of 500%.