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ROAS calculator
Return on advertising spend: what percentage of revenue every crown invested in the campaign returned to you.
Return on advertising spend (ROAS)
A ROAS of 500 % means every crown put into advertising brought five crowns of revenue.
- ROAS
- — %
What ROAS is and how it's calculated
ROAS (Return on Advertising Spend) measures the return on advertising expenditure:
ROAS = revenue from advertising / advertising costs × 100
An e-shop that invested 5,000 Kč in a campaign and gained sales of 15,000 Kč from it has a ROAS of 15,000 / 5,000 × 100 = 300 %. Every crown put into advertising brought three crowns of revenue.
ROAS is sometimes quoted as a ratio ("3:1", "3×"); it's the same number divided by a hundred. We use the percentage here because it relates directly to PNO: a ROAS of 500 % corresponds to a PNO of 20 %, one metric is the inverse of the other.
What to watch out for
- ROAS works with revenue, not profit. A campaign with a ROAS of 300 % is loss-making at a 25 % margin: of three crowns of revenue, only 75 hellers of gross profit remain per crown of advertising. And other costs still aren't paid out of that. The threshold below which a campaign doesn't pay is set by your margin.
- Don't confuse it with ROI, which first subtracts the investment from the earnings. A ROAS of 100 % means the advertising earned exactly what it cost. The ROI of the same campaign is 0 %.
- The ROAS of one campaign says nothing about the whole. A brand campaign tends to have a low measurable ROAS and yet makes all the others cheaper; look at the account's overall PNO too.
Where to go next
You can do the maths. But what next? How to turn customers who bought once into customers who buy repeatedly is the subject of the book Opakovaný prodej.