What is ROAS? ROAS stands for Return on Ad Spend. It's a metric commonly used in marketing and advertising. ROAS represents the ratio of your spend to sales. That ratio tells you how much you made in ad sales for every one dollar that you spent on advertising.
How is ROAS Calculated? ROAS is calculated by dividing your advertising revenue by your advertising spend.
Ad Revenue/Ad Cost
For example, if you spent $100 on ads last week and you made $300 in sales, your ROAS would be 3. This would mean that for every $1.00 that I spent on ads last week, I made $3.00.
Why should you care about ROAS? ROAS can be used to judge your return on investment (ROI). It helps you understand how efficiently your ads are running.
How does ROAS differ from ACoS? ROAS is the inverse of ACoS. ACoS is your Ad Spend divided by your Ad Sales. Using our example from earlier of spending $100 on ads, and making $300 in revenue, we get the following ACoS:
$100/$300 = 33%