Posted in Marketing and Strategy Terms, Total Reads: 414
Definition: Return on Advertising Spend (ROAS)
Return on advertising spend refers to the profit earned on the advertising expenses. This gives us the money earned versus money spent on the advertising campaign & is calculated by dividing the profit generated by advertisement to the money spent on that advertisement. This is very important for companies as all the advertisers want to earn as high return as possible from the advertising. It will tell you whether the advertising is working or not.
ROAS helps companies to identify the return on their marketing efforts & check whether the money spent on advertisement have been worth or not. Companies want to know if their investment has worked or not & if any change in the advertising campaign is required. Some free services & paid services over internet can be used to calculate ROAS. The free services are useful to set goals & numbers.
There are some drawbacks also of ROAS. The result provided by ROAS may not work out properly sometimes. For example a campaign with high ROAS may lose money if the product that they are selling has higher cost to produce & ship which will be combined with cost of advertising.