Formula
Return on ad spend is a multiple, not a profit percent:
ROAS = revenue from the ads / ad spend
A result of 4.00× means four dollars of attributed revenue per dollar of spend. Product cost is not removed.
Assumptions
- The revenue is the amount you attribute to this spend.
- Product cost, fees, and returns are not subtracted.
Worked example
$8,000.00 of revenue on $2,000.00 of ad spend is a return of 4.00×.
Input definitions
- Ad spend
- The media cost used as the denominator.
- Revenue from the ads
- Sales you assign to that spend. Zero is allowed and produces 0.00×.
Limitations
This is a planning estimate, not accounting, tax, payroll, or advertising advice. The currency control changes the symbol only.
Questions
Is 4.00× the same as the investment ROI page?
No. Investment ROI is a percent gain on money invested. This page is revenue divided by ad spend, shown as a multiple.
Does a high multiple mean the ads were profitable?
Not by itself. A 4.00× return can still lose money after product cost.