What is ROAS?
ROAS, or Return on Advertising Spend, is a metric used in digital marketing to measure the effectiveness of an advertising campaign in terms of revenue generated compared to the amount spent on the campaign.
It is calculated by dividing the revenue generated from the campaign by the amount spent on the campaign. A higher ROAS indicates that the campaign is generating more revenue per dollar spent, which makes it profitable.
ROAS = Net turnover / Media Spending
What is Effective ROAS?
What we call Effective ROAS in Quanticfy is a ROAS that takes into account the costs of media campaigns that actually lead to a sale. By including all the “hits” (when people have either viewed or clicked on an ad before making their first order), we get a full view of the customer’s journey that leads to a sale.
So instead of looking at just the revenue generated versus the media spending for a given time period, we include all the interactions with ads that preceded the purchase and include their cost into the ROAS, making it an Effective ROAS.
Effective ROAS = Net turnover / Effective Media Spending
As indicated below, Effective Media Spending takes into account the costs that actually led to a sale during the entire customer journey and not just the media spending of the day the sale occurred.
