ROAS: What It Is and How to Calculate It

Have you run an advertising campaign and want to know how effective it was? ROAS is here to help. Return on Advertising Spend (ROAS) is an indicator that measures the profitability of your marketing efforts.

It applies to all types of promotions, from contextual ads to SEO—essentially, any activities that attract users and convert them into customers. ROAS provides insight into which marketing methods are most effective, helping you shape your overall strategy. Using ROAS, you can:

• Evaluate your campaigns ’overall effectiveness;
• Determine its profitability and optimize it in real time;
• Make informed decisions;
• Adjust advertising strategies and choose the best distribution channels;
• Calculate your ideal advertising budget;
• Understand how much you need to spend to hit your targets;
• Plan future campaigns;
• Predict promotion results and strategize;
• Compare your performance with competitors;
• Identify the strengths and weaknesses of your strategy.

How to Calculate ROAS:

Let's say you spent $1,000 on an ad campaign and made $5,000 from 200 sales. Then, your ROAS calculation would look like this:

• 5 000$ / 1 000$ х 100 = 500%

This means you’ve made $5 for every dollar spent on advertising Important note: ROAS uses revenue, which is the total amount of money received from sales.

This is different from profit, which is calculated as Revenue - Cost Price. You can read more about ROAS on our SendPulse blog.