ROAS
In marketing, it's important to find out what the effect of the marketing you do is. ROAS is a concept that is used to show exactly this. Here we explain what ROAS is, why it is a key concept in marketing and how it is calculated.
What is ROAS?
ROAS is an abbreviation for Return on Ad Spend, i.e. what you get back for the advertising money you spend. It is calculated by dividing the total revenue that can be linked to the marketing by the total advertising cost of the marketing. In simpler terms, ROAS is revenue / advertising costs.
When evaluating which channels and ads to focus on in your marketing, ROAS is often a good approach to what works best for you and your company. Compare ROAS from previous marketing and see where you get the most bang for your buck.
ROAS example:
You have spent NOK 15,000 on advertising one month. This month, you sold 250 products at £399 each. This results in earnings of NOK 99,750 (excluding product costs). Then the calculation for ROAS goes like this:
In this case, you have 665% earnings on what you've spent on marketing.
Frequently asked questions:
What is ROAS used for?
ROAS stands for return on ad spend and is used to see the effect of your marketing. You find out how much you get back for the money you spend on digital advertising and other marketing.
How to calculate ROAS?
You calculate ROAS by dividing your revenue by your advertising costs. The formula for calculating this looks like this: (Revenue / advertising cost) * 100 = ROAS.
