As an ecommerce business, how do I calculate my Return On Ad Spend?
Return on ad spend (ROAS) is a marketing calculation that determines the revenue earned for each dollar spent on advertising campaigns.
To simplify, ROAS means the total amount of revenue gained (conversion value) attributed to advertisements and divided by the cost of the advertisements.
For example if you spend $1000 in advertising in 30 days, generating you $10,000 worth of transactions, the ROAS would be 10 as for every $1 in spend you gain $10 in return.
This metric does not determine a business’s profitability as a business must consider the many other associated costs, it does however show the direct revenue generated from marketing efforts.
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