How to Calculate ROAS (Return On Ad Spend)

How to Calculate ROAS Return On Ad Spend :

ROAS is a metric that measures the effectiveness of a campaign in digital marketing. By calculating ROAS you can evaluate whether the campaign you have run is profitable or not.

ROAS formula = (Revenue / Ad Spend)

For example, you spend as much as $3 million in advertising costs in 1 month. Then from the campaign you can generate $6 million. So the ROAS is IDR 6 million divided by $3 million = $2 or 2:1 or 200%. roas formula google ads

In other words, every time you spend $1 on advertising, you will get $2.

How to calculate ROAS in Google Ads

To be able how to calculate ROAS Return On Ad Spend in Google Ads you must install conversion tracking and capture the conversion value printed on the website as revenue. what is a good roas

After that you just use metric Conv. value / cost.

roas metrics
roas vs roi

If you want to see it in percent format, you need to create a custom column and display it in the report table.

The formula is (Conversion value / Cost) * 100%.

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roas vs acos

Conclusion

  1. ROAS is a metric to evaluate the effectiveness of an ongoing campaign
  2. To be able to calculate ROAS in Google Ads you must install conversion tracking
  3. If the ROAS value is above 100%, it means that your campaign is “profitable” (excluding other expenses besides advertising costs)
  4. When you find a campaign with a high ROAS value you may need to allocate a larger budget for that campaign
  5. You can optimize your ROAS value by using target ROAS bidding (after your campaign has had 50 conversions in the last 30 days)
  6. Even if the ROAS value is above 100%, it is not possible to ensure that your business is profitable because net profit will be affected by many factors such as production costs, operational costs, partner/vendor costs, affiliate commissions, profit margins, employee salaries, etc.