Calculating ROAS in 2022
Return on Ad Spend (ROAS) is an integral component of a successful advertising campaign.
ROAS is a metric that allows you to determine whether or not your ads are profitable. Calculating ROAS allows you to quantify and manage your ads more efficiently.
At Optily we’re big fans of ROAS. So, today we want to talk through how your business can calculate your own ROAS and see how it compares on the big advertising platforms.
Just this month, Optily CEO Brendan Hughes, dove deep into eCommerce Advertising: 10 Proven Strategies to Improve ROAS.
At the end of this article, you’ll be able to fully understand what ROAS is and how you can use it to effectively use it to boost your advertising campaigns.
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What is ROAS?
ROAS stands for Return On Ad Spend.
It is a metric that marketers use to measure the amount of revenue their business earns for each dollar they spend on advertising.
ROAS essentially measures the effectiveness of a business’s advertising efforts. The more effectively a business’s advertising messages connect with their audience, the more revenue they’ll earn from each dollar of ad spend.
The goal is always to achieve a higher ROAS, as it means you’re getting more bang for your buck.
Calculating ROAS - A How To Guide
I’m sure you’re thinking because ROAS is such an important metric it must be a complicated formula.
Thankfully, calculating ROAS is a simple process!
You can calculate ROAS by dividing the total revenue you earned from the advertising campaign by the amount you spend on advertising.
As an example, if it costs you $1000 in ad spend to sell one unit of a $10,000 product, this means your ROAS is 10.
So for each dollar you spend on advertising you earn $10 back… this would be an amazing ROAS!
What is a good return on Google, Meta, and TikTok?
Unfortunately asking that question is a little like asking “how long is a piece of string?”
A good return for your business depends on many different things including what you think a good return is.
➡️ What is a good ROAS on Google
Google Ads is the largest player in the search ads game.
Meeting the average ROAS for Google Ads is great, but going beyond the average is even better.
A good ROAS for Google Ads is anything above 400% — or a 4:1 return. Simply put, for every $1 you spend on advertising, you would expect $4 in return.
This is above the average in the industry so if you’re seeing a return above 4:1 you’re doing amazing!
➡️ What is a good ROAS on Meta?
In terms of social ads, Meta (Facebook), is where all advertisers want to be.
Social ads aren’t as lucrative in terms of ROAS.
A good return for most businesses is twice their initial investment – or a 2:1 return. Again, in simple terms, this means if you spend $1 on advertising, you’d expect $2 in return for your efforts.
➡️ What is a good ROAS on TikTok?
In 2022, everyone knows what TikTok is.
While some businesses can benefit from the phenomenon of virality and see incredible ROAS, the average return sits right between Meta and Google.
As it is a social platform like Meta, its ROAS is more in line with that sector.
A good return for most businesses on the TikTok platform is 250% – or 2.5:1. In simple terms this means for every $1 that you spend to advertise on TikTok, you expect to see $2.50 in return.
Conclusion
Calculating ROAS really isn’t that difficult after all is it? Taking the initiative now after reading this article and calculating your ROAS on Google, Meta, TikTok, or any other platform will allow you to optimize your advertising process today!
If you’re disappointed by the ROAS you’re currently achieving, or if you want to see a large return get even larger, then look no further than Optily We can supercharge your advertising across the major advertising platforms, so that you achieve ROAS levels that you never thought were possible.
Seriously, this isn’t a joke. Click the button below to see for yourself!
If you’ve come to the end of this article and thought, well I’m sick of ROAS I want something new and exciting. Well, we got something for you too. Just this month we spoke with Kathleen Booth on Optily Radio. Give the Looking Beyond ROAS episode a listen today.
Thanks for reading and I hope you see your ROAS soar with Optily soon!🚀
