Feb 23, 2022
Return on Ad Spend (ROAS) is a crucial metric to understand in pay-per-click management. The ROAS formula tells advertisers how much they have spent in total (CPA) and what percent earned back from that investment in terms of conversions and sales. A positive ROAS means more profit than cost, whereas a negative ROAS means that more money was spent than the marketer made back.
There are two important metrics for measuring the progress of a PPC account: clicks and revenue. Clicks can be optimized in a number of ways; however, revenue is the 'holy grail' for every campaign. Returning on Ad Spend (ROAS) is a metric marketing professional use to measure how well their PPC accounts produce revenue. Based on this definition, ROAS looks at Revenue divided by Adspend to determine the percentage increase or decrease of sales from advertising online.
Similar to return on investment (ROI), ROAS calculates how much a company has gained through exposure to a marketing campaign. However, while ROI calculates campaign results based on sales, ROAS calculates benefits from an advertising campaign using Return on Advertising Spend (ROAS).
More info about a complete guide of ROAS to return-on-ad-spend for PPC
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