What is Roas? Find out everything here!

open notebook with graphs and roas result

What is Roas? Find out everything here!

The digital marketing universe is full of words and acronyms in English, you may have already seen some of them. Today we are going to investigate another one: Roas.

The acronym stands for “Return on Advertising Spend” or Return on Advertising Investment. It is an essential metric for evaluating the efficiency of marketing campaigns.

Understanding Roas is essential for any marketer who wants to optimize the performance of their campaigns and ensure that every dollar spent on advertising is generating positive results.

So, let's take a deep look at what Roas is, why it's important, and how it differs from other similar metrics, such as ROI.

Roas: what is it?

First of all, let's understand what Roas is: it stands for Return on Advertising Investment. It is a metric that indicates the revenue generated for each amount spent on advertising.

In other words, Roas tells us how much money the company earns in revenue for every real invested in its advertising campaigns.

The formula for calculating Roas is quite simple: 

  • Revenue generated by advertising divided by the cost of advertising. For example, if an advertising campaign generated R$10 in sales and cost R$2.000, the ROAS would be 5, that is, for every real spent on the campaign, the company obtained R$5 in return.

Why is it important?

Roas is an important metric because it provides a clear view of the efficiency of advertising campaigns.

By directly measuring the financial return on advertising spend, it allows marketers to assess whether their strategies are delivering positive results or whether they need adjustments.

Additionally, Roas is an indicator of brand success. A high Roas indicates that campaigns are attracting customers and converting them into sales.

This is essential to maintain the company's financial health and to justify continued investment in advertising.

What is the difference between ROI and Roas?

Although Roas and ROI are often confused, they measure different aspects of financial performance:

  • ROI assesses the total return on investment, taking into account all associated costs, not just advertising spend;
  • ROAS focuses exclusively on the relationship between advertising spending and the revenue generated by that spending.

How to calculate Roas?

ROAS formula

For example, if a company invested R$50 in an advertising campaign and obtained R$200 in sales, the Roas would be 4, since 200 divided by 50 equals 4.

This means that for every real invested in the campaign, the company generated R$4 in revenue.

However, to calculate ROI, we would need to consider all additional costs such as production, distribution, and other operational expenses. 

Therefore, While Roas is more specific and targeted, ROI offers a more comprehensive view of the total return on investment.

You can also use Roas calculator to perform calculations more accurately and practically. 

What is considered a good Roas?

A good ROAS can vary depending on the industry and the specific goals of the company.

In general, marketing works so that the result is not less than 2, which for Roas is considered positive, it already represents a profit for the brand as it indicates that the company is earning twice the amount spent on advertising, but the higher, the better.

However, the ROAS targets for each campaign can be assessed individually and with higher objectives, depending on the company's operational costs and profit margins.

5 Ways to Improve Roas

Customization

Personalized ads based on user behavior and purchase history tend to have a higher conversion rate.

Use techniques like remarketing and content personalization to increase the relevance of your ads.

A/B test

Conduct ongoing A/B testing to identify which ad variations, landing pages, and strategies work best.

Small changes, such as colors, CTAs, and elements, can have a significant impact on campaign performance.

User Experience

Optimize your website or landing page to ensure fast and intuitive navigation.

A smooth user experience can increase conversion rate and consequently improve Roas. 

SEO and keywords

For paid search campaigns, constantly review and adjust your keywords. Use long-tail and negative keywords to improve relevance and reduce costs.

Campaign automation

Use automation tools to optimize budget bids in real time. Platforms like Google Ads offer automation options that can help you maximize ROA.

What is Roas in Google Ads and Facebook?

Understanding what ROAS is in the context of specific platforms is essential to optimizing your campaigns.

  • What is Roas in Google Ads? Roas can be monitored using the “Conversion Value per Cost” metric, which indicates the total value of conversions generated divided by the total cost; 
  • What is Roas on Facebook? Roas is displayed directly within campaign performance metrics, making it easy to analyze and adjust ad strategies.
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Meet the GS2 Marketing agency

Understanding what Roas is and how to use it effectively can transform the way you manage your digital marketing campaigns.

Remember, a good ROAS will vary depending on your industry and specific campaign goals, but always look for ways to improve your strategies to achieve superior results.

Count on our expertise to increase your results. 

We use the best digital marketing tools to produce assertive content for our clients, with creative and remarkable actions. 

This seriousness and intelligence in digital marketing provides recognition from many of our clients, for whom we have become a lead generation and conversion machine. 

Don't waste time! Increase Roas with the best digital marketing practices.

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