Return on ad spend (ROAS) is a key metric for eCommerce businesses. It tells you how much revenue you generated for every dollar you spent on advertising. In this blog post, we will explore ROAS statistics for 2023. We will look at the average ROAS for various industries and geographies, as well as the factors that affect ROAS. We will also provide tips on how to improve your ROAS.
What is ROAS?
ROAS, or return on ad spend, is a metric that measures the profitability of an advertising campaign. To calculate ROAS, simply divide the total revenue generated by the campaign by the total amount spent on the campaign. The resulting number will be your ROAS.
For example, let’s say you spend $100 on an advertising campaign and it generates $500 in revenue. Your ROAS would be 5 (500/100), meaning you made $5 for every $1 you spent.
ROAS is a useful metric for evaluating the performance of an advertising campaign, but it’s important to keep in mind that it doesn’t take into account other factors such as brand awareness or customer loyalty.
How to Calculate ROAS
There are several different ways to calculate ROAS, but the most common and simplest method is to divide your total revenue by your total ad spend. This will give you your ROAS percentage. For example, if you spent $100 on ads and generated $1,000 in sales, your ROAS would be 10%.
To get a more accurate picture of your ROAS, you can break down your ad spend by channel and compare it to your sales. For example, if you spent $50 on Facebook ads and $50 on Google AdWords, and generated $600 in sales from Facebook and $400 from Google, your ROAS would be 12% for Facebook and 8% for Google.
You can also calculate ROAS for specific campaigns or products to see which are performing best. This information can help you allocate your ad budget more effectively.
Finally, it’s important to remember that ROAS is just one metric among many that you should consider when assessing the performance of your digital marketing efforts. Other important metrics include conversion rate, cost per acquisition (CPA), and lifetime value (LTV).
What is a Good ROAS?
A good ROAS is a metric that indicates how much revenue your company is generating for every dollar spent on marketing and advertising. The higher your ROAS, the more efficient your marketing and advertising campaigns are at generating revenue.
There are a few key things to keep in mind when evaluating your ROAS:
1. Benchmark against industry standards – Compare your company’s ROAS to similar businesses in your industry to get a sense of how you stack up. If you’re significantly above or below the average, it could be an indication that you’re over- or under-performing.
2. Look at trends over time – Use historical data to track changes in your ROAS over time. This can help you identify whether your campaigns are becoming more or less effective and make necessary adjustments accordingly.
3. Set goals – Use ROAS as a guide to setting performance goals for your marketing and advertising campaigns. Doing so will help ensure that you’re always working towards improving your efficiency and maximizing return on investment.
How to Improve Your ROAS
There are several steps you can take to improve your ROAS.
1. Make sure you are targeting the right audience with your ad campaigns. This includes ensuring that your ads are relevant to the products or services you offer and that they are targeted at users who are likely to be interested in what you have to offer.
2. Make use of negative keywords in your campaigns. This will help to filter out unqualified clicks and improve the quality of traffic that is coming to your site.
3. Use compelling ad copy to grab attention and encourage click-throughs. Your ads should be clear and concise, and they should focus on the benefits of your products or services.
4. Use attractive and relevant images in your ads. The image you choose should be visually appealing and related to the product or service you’re promoting.
5. Use effective call-to-actions in your ads. Your call to action should be clear and concise, and it should encourage users to take the next step, whether that’s visiting your website or making a purchase.
What are the Benefits of a High ROAS?
A high ROAS indicates that your company is generating a lot of revenue for each ad dollar spent. This means that your ad campaigns are highly effective and efficient. In other words, you’re getting a good return on your investment.
There are several benefits of having a high ROAS:
1. You’ll save money: If your ad campaigns are generating a lot of revenue, you’ll be able to save money on your marketing budget. This will give you more money to reinvest in other areas of your business or to simply pocket as profits.
2. You’ll attract more investors: Potential investors will be impressed by your company’s high ROAS and may be more likely to invest in your business. This could give you the capital you need to grow your business even further.
3. You’ll have happier customers: Customers who see that your ads are generating a lot of sales will be happy with your products or services. They’ll be less likely to switch to another company and will continue doing business with you for the long haul.