WARC DC Series on Metrics & Measurement: Understanding ROAS (Return on Advertising Spend)

Jo Bowman and Gregory Grudzinski

ROAS is a tool that can be very helpful in measurement – but it can also be a bit of a blunt instrument. In order to use it effectively, advertisers should understand the full meaning behind the metric.

What’s ROAS?

ROAS stands for Return on Advertising Spend, and it’s designed to help marketers calculate the bang they’re getting for their advertising buck.

It’s an easy calculation to make: you divide the revenue your brand or product generates by the amount you’ve spent on advertising over the same period.

For example, if you’ve spent $1,000 on advertising and generate $5,000 in sales/revenue, your ROAS is 5,000/1,000. ROAS can be expressed in a few different ways. For this calculation, you could say your campaign had a ROAS of 5:1, or just 5, or 500%.

However you express it, it means...

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