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ROAS: Understand what it is and how to invest wisely in your advertising

Posted: Sun Dec 15, 2024 8:40 am
by Abdur7
ROAS is used to measure the profits earned through paid media advertising and is a key metric for anyone investing in that type of marketing campaign.
Every marketing manager knows exactly what digital marketing is all about , but what companies are most interested in is knowing whether the strategies applied are giving the expected results. That is why it is necessary to understand how, for example, ROAS works .

This formula is applied to advertising actions on the Internet. And to find out what this metric is, how to calculate it and in what situations it can be used, continue reading this post.

What is ROAS?
What is the role of ROAS in digital marketing?
What is the difference between ROAS and ROI?
How to calculate ROAS?
In what situations should ROAS be used?
What is ROAS?
ROAS is an acronym for Return on Advertising Spend , making it belgium email list 2.8 million contact leads one of the most important metrics for online advertising, especially to clarify one of the key points of marketing management: when investing a certain amount of money in marketing , how much return will it generate?

This should be taken into account in all the marketing channels you use within your strategy. If a channel —whether it's your blog , social media, email, paid media or any other— isn't paying for your own investments, it means that it's not worth continuing to use it or that it's necessary to review the actions applied to it.

As you can see, ROAS is very similar to another well-known marketing metric, ROI . However, while ROAS is used to measure overall return on marketing investment, it applies to specific campaigns, such as ad groups. We’ll talk more about the difference between the two later in this article.

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Thus, ROAS is a flexible way to evaluate aspects of Digital Marketing. In fact, let’s dive deeper into that point now.


What is the role of ROAS in digital marketing?
As we said earlier, ROAS is about the costs and profits of online advertising. So, here, the visibility and clicks that your ads generate must generate positive results for the company's revenue.

That way, marketers can track their paid media campaigns and make sure they are making a profit. That’s why, if you run ads on Google Adwords, Facebook Ads, or Instagram Ads , for example, it’s essential to understand how ROAS works .

To do this, it is necessary to track conversions across all of these ad forms. When it comes to Google Adwords , ROAS is the average conversion value that ads bring. In Facebook Ads , it can be assigned to individual ads made from the pixel.

Having those numbers is critical for marketing managers who need to report to their superiors who make decisions in the department. That way, when setting up future campaigns, take into account ROAS numbers from previous months to improve the next ones.

ROAS can also be understood as a tool with which you can control, analyze and optimize the success rate of your advertising measures . Therefore, we can say that ROAS is more accurate than conversion rate as an indicator of profit maximization.

If an individual ad is underperforming, ROAS can be improved in several ways. By analyzing and comparing the success of different ad metrics, you can optimize budget usage and increase profits.