Return on ad spend (ROAS) is the most common way for eCommerce sites to measure their advertisement’s effectiveness.
ROAS is the multiple your advertisement spend generates, and the calculation is revenue generated from ads divided by the ad spend.
Let’s look at an example:
- Your local fishing supplies store spent $100 on ads. Those ads generated $3500 in revenue.
- 350 / 100 = 3,5
- The ROAS of the ads is 3,5 (or 350%)
Sometimes ROAS is shown as a percentage. For example, Google Analytics shows ROAS in percentage, but it’s common to talk about ROAS in whole numbers.