This metric is very similar to another marketing metric, ROI or return on investment.
ROI is a metric that gives us the percentage of return on investment made, that is, it allows us to know whether an action carried out has been profitable or not. The formula to calculate ROI is as follows:
ROI=(Income – Investment)/Investment x 100
Following the previous example:
The main difference is that ROAS gives us a ratio that is calculated by comparing the amount earned and the amount spent, while ROI takes into account the amount earned after subtracting expenses. ROI measures earnings while ROAS measures the gross revenue generated for each euro spent on advertising.
The importance of understanding ROAS
ROAS is an essential metric in eCommerce to quantitatively armenia number data evaluate the performance of advertising campaigns and how they contribute to the bottom line. ECommerce businesses that monitor ROAS will be able to make better decisions about where to invest their money and how they can be more efficient .
A good understanding of the return on advertising investment of our campaigns will help us to:
Evaluating profitability: ROAS allows businesses to determine how much revenue they are generating from their advertising spending. This is essential in assessing whether a marketing campaign is profitable or not.
Optimizing advertising investment: With ROAS, companies can identify which advertising channels, platforms or strategies are most effective in terms of return on investment.