What does ROAS mean in overseas advertising?

We have generally heard of overseas advertising placementROIReturn on investment, also known as the input-output ratio, is used to measure advertising revenue. In fact, ROAS is also an important indicator for evaluating advertising performance returns, and it is more effective thanROIMore direct.

ROAS，Return on Ad Spend(Return on advertising expenses),How much revenue can be generated from advertising expenses per knife.

The difference between these two is that ROI calculates the revenue ratio that a company obtains from advertising or other channels after deducting expenses (including operating costs, revenue, etc.). ROAS calculates the average return obtained from advertising alone.

The calculation formula for both is:

ROI=(Total Revenue Cost Input)/Cost Input * 100%

ROAS=Total revenue/advertising expenses x 100%

Assuming a product costs $50 and sells for $100, you sell 1 item and generate $100 in sales revenue. The advertising cost is $10. So the profit is 100-50-10=40, while the total cost is 50+10=60.

So, ROI=40/60 * 100%=66.7%.

In the above example, if the total revenue is $100 and the advertising investment is $10, then ROAS=10.

ROASYou can see it directly in the advertising background. This is a key indicator to measure whether advertising needs improvement to promote sales and increase profits.ROASThe higher the value, the better the advertising effect. Generally speaking,Reaching 3:1 is a moderately good effect. But the situation of each investment entity is different, and some companies may need a 10:1 ROAS to profit.

If yourROASLow indicates that advertising has not brought enough profits, so it is necessary to improve your advertising strategy, such as removing keywords with poor results, improving advertising copy, optimizing audience groups, etc.