What is ROAS and why does it matter for advertisers?
If you’ve ever struggled to prove the impact of your campaigns, this metric is your golden ticket. In this guide, we break down exactly what ROAS is, how to calculate it, and how to use it to maximize your return, and your results.
From setting realistic performance goals to optimizing campaign strategy, understanding Return on Ad Spend (ROAS) puts the power of precision back in your hands.
Return on Ad Spend (ROAS) measures how much revenue you earn from every dollar spent on advertising. It’s a critical metric that tells you how effectively your campaigns convert ad spend into revenue.
If you earned $5,000 from an ad campaign that costs $1,000 to run, your ROAS is 5:1. The higher the ROAS, the more profitable your campaign.
ROAS is critical for:
When you know your ROAS, you can stop guessing and start scaling. This is the core metric that turns your data into action.
It’s easy to confuse ROAS (Return on Ad Spend) with ROI (Return on Investment), but they offer different views:
Both are useful, but ROAS is your go-to metric for campaign-specific performance.
Want to understand more about key metrics in digital advertising? Read our 18 Advertising Metrics That Matter.
Here is the return on ad spend formula:
Tracking ROAS and other advertising metrics is simplified through programmatic advertising strategies with an ad partner’s ad platform. However, there are many ways advertisers can track and analyze ROAS with real-time reporting, using ad platforms and analytics tools like:
Want to see real-world applications? Explore Programmatic Advertising Examples.
There’s no universal ROAS benchmark, it varies based on your goals, margins, and industry.
Let’s take business models. ROAS can differ because of factors like profit margins or customer acquisition costs. For instance, a SaaS (Software as a Service ) business model could command higher ROAS because of recurring revenue and CLV (Customer Lifetime Value). In the same way, some industries, like sports, garner higher ROAS (4.98) than, say, automotive (1.93). Or campaigns centered on gaining market share might expect a higher ROAS.
Lower ROAS results aren’t always a red flag, and are often expected in specific business scenarios, like during early growth phases or focusing on brand awareness over instant conversions. Setting initial expectations and keeping a keen eye on ROAS as a campaign progresses can help advertisers know campaigns are performing as planned. This governance can also signal inefficiencies in targeting, messaging, or ad placements, requiring advertisers to adjust strategies.
At Next Millennium, we’ve seen firsthand how ROAS can vary by vertical and campaign type. We deliver exclusive ads and premium placements, consistently achieving:
These results show that success isn’t one-size-fits-all, but about matching your ROAS expectations to the goals of your campaign, then optimizing along the way.
Here’s how we deliver results that matter:
Our programmatic platform is built to scale campaigns efficiently, boost ROAS, and improve growth through strategic, data-driven advertising.
Ready to stop guessing and start optimizing? Book a discovery call
Maximize every dollar. Prove your performance. Grow with Next Millennium.