What is ROAS?

Posted in Internet Marketing by John Learn on 16 April 2021

ROAS stands for Return On Ad Spend, and it's a metric that indicates how well your advertisements are performing relative to the amount you are spending on them.

It's a pretty simple value to calculate:

ROAS = Revenue Generated from Advertising / Spend on Ads

If your ROAS is greater than one, you're making money from your advertisements. If it's less than one, you're losing money.

Google Ads, and other pay-per-click platforms, can be set up to use your target ROAS in its bid calculations for your advertisements. If you provide conversion values and a Target ROAS as part of your "Maximize Conversion Value" bid strategy, Google will do it's very best to place your bids in a way which will meet your target.

Don't be surprised if Google suggests that you raise your daily budget — often the premium placements cost considerably more than the low value ones.

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