Return on ad spend (ROAS)

Return on ad spend (ROAS) is a super-simple but super-important advertising metric. Ultimately, it might be the most important advertising metric of all, because it determines whether your ad campaigns are revenue positive or not.

ROAS measures the amount of revenue earned for every dollar spent on advertising. Similar to return on investment (ROI), for any business or personal investment, ROAS measures the ROI of money spend on advertising. You can measure your complete and overall ROAS of an entire marketing budget, but you can also measure more granularly, calculating return on ad spend on specific ad campaigns, targeting, and more.

Return on ad spend is calculated as follows:

ROAS = Revenue attributable to ads / Cost of ads

For example, if you invest $100 into your ad campaign and generate $250 in revenue from those ads, your ROAS is 2.5. If you achieve this, congratulations! You’re doing very well indeed.

It is important to note that there are several ways to determine the cost of ads.

You may want to track just the actual dollar amount spent on a particular ad platform: what your ad networks bill you. On the other hand, you may want to include additional costs of marketing such as:

• Salary Costs
  The cost of in-house or contracted personnel who manage the ad campaign. (Perhaps this is YOU.)
• Vendor Costs
  Fees and commissions from vendors that facilitate the ad campaign.
• Affiliate costs
  Individual affiliate commissions and any affiliate network fees.

Depending on the type of ad campaign you’re running, it’s often useful to calculate the ROAS purely based on ad costs, and a separate ROAS that includes these additional advertising expenses to get a more complete picture of the campaign’s profitability.

No-one advertises just for fun.

You want to see a return on dollars spent on advertising.

Therefore, in the context of mobile marketing, ROI is among the most critical metrics for app advertisers. Note: ROI is a global metric that measures an organization’s overall profits after all expenses, whereas ROAS allows marketers to measure exactly how much advertising is contributing to the bottom line.

Tracking your ROAS across campaigns and ad platforms also allows marketers to measure, evaluate, and compare the effectiveness of their advertising efforts and partners. As mentioned, ROAS can be broken down into the return on a particular ad platform, campaign, or ad, allowing marketers to evaluate where they’re achieving the highest level of profitability.

Clearly, you want to invest your ad dollars in campaigns with partners that achieve the highest possible levels of return on ad spend.

Before launching an ad campaign, it’s recommended to determine a minimum, acceptable, and target ROAS.

BigCommerce highlights that there is no “right” answer to what can be considered a good ROAS as this will change based on the organization’s profit margins and other operating expenses. Typically, however, a common benchmark for an acceptable ROAS is 4:1, meaning for every $1 of ad spend you generate $4 in revenue.

A ROAS at that level not only provides ROI on your actual hard advertising costs, but also the associated costs we mentioned earlier: salaries, vendor costs, and everything else it takes to run a business.

By combining ROAS with other metrics such as cost per acquisition (CPA), cost per lead (CPL), and cost per click (CPC), advertisers get a more complete picture of the KPIs they need to hit in order to reach certain revenue targets.

Looking at these PPC metrics more holistically can also provide an indication of traffic and lead quality from each ad source.

For example, PPC Hero highlights that if you have a low CPL and a low ROAS, this indicates that the lead quality may not be sufficient for that campaign. Similarly, if you have a higher than average CPL but also a high ROAS, the leads may be more qualified than other channels, in which case your CPL benchmarks may need to be raised.

As we’ve mentioned, in the context of marketing, ROAS is among the most foundational KPIs to track.

Singular tracks ROAS for advertisers on thousands of networks such as Google, Apple Search Ads, ironSource, Liftoff, BlueStacks, and thousands more.

Singular also enables ROAS tracking under App Tracking Transparency and Apple’s SKAdNetwork framework, which means that even if advertisers aren’t getting IDFAs with their installs, you can continue to monitor profitability on all your ad campaigns.

Singular aggregates ad costs and from all your media partners (and any data source you specify) so that you can analyze complete and comprehensive ad spend and ROAS in a single platform.

This means you can account for the ROAS of your entire marketing budget, regardless of the data source.

Calculating the true ROI of your ad campaigns can be a challenge if the business has multiple revenue streams and is using multiple ad platforms. With Singular’s ad monetization attribution, this allows you to automatically account for ad revenue in your ROAS formula, not just in-app purchases.

By combining ad attribution, other revenue sources, and cost aggregation, this provides advertisers with the true performance of the user cohorts they’ve received from each advertising channel and campaign. Ultimately, knowing the true performance of your ad campaigns at the most granular level enables better decision making and more intelligent scaling.

Finally, Singular’s ROAS analytics don’t end at the campaign level.

The Singular platform also allows you to visualize performance of individual ad assets, including the performance metrics of videos and images side by side. Regardless of the source, our data connectors and attribution platform provide the true ROI of each campaign, publisher, creative, and keyword.

In summary, Singular provides mobile marketers with unrivaled ROI insights, including the ability to visualize creative assets side by side with their respective performance metrics, as well as granular analytics to get a comprehensive view of the organization’s ROAS.