RoAS

Introduction to an important Advertising metric

What is RoAS

RoAS = Return on Ad Spend

The RoAS is a metric that can and should be used to measure the effectiveness of your advertising campaigns.

In other words, it tells you how much revenue you made for each EUR you spent. 

How to calculate RoAS

RoAS = Ad Sales / Ad Spend

How to calculate Break-Even RoAS

The break-even RoAS is when you have not made any money, but also have not lost any money from your advertising campaigns. 

This metric can be used to find a good balance of what your minimum RoAS should be before pausing a campaign or before a campaign needs to be optimized because of a poor RoAS performance. 

Step-by-step calculation guide: 

1. Calculate your "Product Profit Margin" 
   
   

   (Your Product Profit Margin is the profit you have made with the sale of a product)

   Example: 

   Product Sales Price - 89 EUR 
   COGS - 47 EUR 
   
   Profit margin = 89 EUR - 47 EUR = 42 EUR
   
   
2. Calculate your Break-Even RoAS
   
   Product sale price/break-even point = minimum RoAS
   89 EUR / 42 EUR = 2,11 minimum RoAS 

• • RoAS > 2,11 means that your ad campaign is profitable
  • RoAS < 2,11 means that your ad campaign is not profitable 
  • RoAS = 2,11 means that you are breaking even