What is ROAS and How is it Calculated?
**ROAS (Return on Ad Spend)** is a marketing metric that measures the amount of revenue your business earns for each dollar it spends on advertising. It is expressed as a ratio or a percentage.
The formula is simple:
ROAS = Gross Revenue from Ad Campaign / Cost of Ad Campaign
For example, if you spend **$1,000** on ads and generate **$5,000** in revenue, your ROAS is **5:1** (or 500%). Unlike ROI, which considers total costs (including shipping, manufacturing, and labor), ROAS focuses purely on the efficiency of your advertising spend. This makes it an invaluable tool for media buyers and digital marketers to quickly identify which campaigns are worth scaling and which should be paused.