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ROAS stands for “Return on Ad Spend.”
As the full name implies, it tells you how much money you’re earning as a result of the amount you spend on advertising.
Return on ad spend is a calculation that measures the cost-effectiveness of advertising efforts.
It can help businesses and other entities figure out if their advertising strategy is worth it or not.
When a business tries a new advertising campaign, they may compare the ROAS at the start of the campaign, at the mid-point, and at the end.
This can help determine whether they should renew the campaign or try another method of outreach.
Here’s how to calculate ROAS: divide the total revenue you earned from advertising by the amount you spend on advertising:
ROAS = (Revenue Earned From Advertising / Advertising Expense) x 100
For example, if you spend $3,000 on Google Ads and earned $6,000 from people who clicked on those ads, then your ROAS is $6,000 / $3,000 or 2. In accounting terms, that 2 means 200%.
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