How to Calculate Return On Advertising Spend - Tutorial, Definition, Formula, Example

How to Calculate ROAS - Tutorial

Definition:

Return On Ad Spend (ROAS) is a revenue based metric which is used to evaluate the efficacy of online advertising campaign.

Formula:

ROAS = (Revenue value - Ad spend value) /Ad spend value Where, ROAS - Return on Ad Spend

Example:

Hiox spent $20,000 on paid search in November, and generated $60,000 in revenue. Find the ROAS value of the company ?

Given,

Revenue value = $60,000 Ad spend value = $20,000

Solution:

Substitute the values in the formula,

ROAS = (Revenue value - Ad spend value) /Ad spend value
  = ($60000 - $20000) / $20000
  = $2

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