When we carry out a digital marketing campaign we have different metrics (like ROAS) and KPIS that help us know if we are reaching the goals we set. Being able to analyze the data we are getting is one of the great advantages of online campaigns and we need to take advantage of it to extract all the information that will help us improve.<\/p>\n\n\n\n
In the large amount of metrics we have at our fingertips, ROAS or Return on Advertising Investment is a variable that Google offers us that aims to measure the effectiveness of digital marketing campaigns according to the objectives that have been set. Specifically, the ROAS is the percentage of income obtained in relation to the investment made and answers a fundamental question in marketing: if I invest X amount of money in this channel, how much will I get back for every euro spent?<\/p>\n\n\n\n
The formula for calculating the return on advertising investment is by dividing the revenue by the investment and multiplying that result by 100.<\/p>\n\n\n\n
Let’s take an example with an Adwords campaign. Let’s imagine that in a campaign to sell shoes we got a total revenue of 8,000 euros per month and the Adwords account costs us about 2,500 euros per month. ROAS = 8.000 \/ 2.500
This means that for every euro spent our ROAS is 3.20 euros.<\/p>\n\n\n\n
Difference with ROI
This metric is very similar to another marketing metric, ROI. ROI is a metric that gives us the percentage of profitability on the investment made, that is, it lets us know if an action taken was profitable or not. The formula for calculating ROI is as follows:<\/p>\n\n\n\n
ROI= (INCOME – EXPENSES)\/EXPENSES X 100
The main difference is that ROAS gives us a ratio that is calculated by comparing the amount earned and the amount spent, while ROI takes into account the amount earned once expenses are subtracted. ROI measures earnings, while ROAS measures the gross income generated from each euro spent on advertising. KPIs for eCommerce: 8 indicators to optimize your strategy and sell (more)<\/p>\n\n\n\n
ROAS is an essential eCommerce metric for quantitatively assessing the performance of advertising campaigns and their contribution to the bottom line. eCommerce businesses that monitor ROAS will be able to make more accurate decisions about where to invest their money and how they can be more efficient.<\/p>\n\n\n\n
A good understanding of the return on advertising investment of our campaigns will help us to:<\/p>\n\n\n\n