The Plain English Guide to Return on Ad Spend (ROAS)
As a writer, I’ve never been very good at math. I know … shocking.
Most marketers can relate because as a bunch, we tend to be better at English and history than math and science.
However, as a marketer, we need to be able to analyze data and calculate the effectiveness of an article or campaign, even though math might not be our strong suit.
One of the calculations we need to run and metrics we need to track is return on ad spend (ROAS).
Below, let’s review ROAS. In this post, we’ll discuss what ROAS is, how it’s different from ROI, and how to calculate it.
Ultimately, ad spend is meant to measure the effectiveness of a specific ad campaign, not your overall ROI — more on that below.
Besides ROAS, you’ll most likely measure other metrics such as click-through rate and ROI. By measuring multiple metrics, you’ll get a more accurate view of your results.
Of course, measuring performance and tracking analytics is an important part of any marketing campaign.
By tracking performance, you can improve and iterate on your marketing techniques. Plus, data is one of the only ways to truly prove that your department brings in revenue, which is incredibly important.
However, it’s important to note that not everything can be measured with quantitative data. For instance, calculating brand awareness and sentiment is much more difficult. And while you can calculate downloads or email sign-ups, those might not always lead to revenue.
When you’re analyzing any data, it’s important to consider context and review qualitative data as well as quantitative data.
That being said, today we’re going to dive into ROAS specifically. Before we do that, let’s review how ROAS is different from ROI.
Ultimately, this means that the only cost considered in a ROAS calculation is the cost of advertising. On the other hand, the cost of an entire project or campaign will be considered in an ROI calculation.
The goal of your ads campaign, of course, will be to generate a positive return on your ad spend. However, how can you determine what that ad spend should be?
In the YouTube video below, HubSpot details how to determine ad spend by understanding the bidding system used by ad networks.
You’d use ROAS to help you determine how you spend your advertising budget and as a signal to determine if your campaigns are successful. This would let you know that you might need to evaluate your approach to running ads.
So, at this point, you might be wondering, “How can I calculate ROAS?” Let’s review that now.
While the equation is simple, you might face difficulty gathering the data needed to run this calculation. For instance, calculating the cost of an ad isn’t always easy. You’ll need to consider the cost of the ad …read more
Source:: HubSpot Blog
