Return On Advertising Spend

ROAS measures the revenue generated for every dollar spent on advertising.

Why it matters

Helps optimize ad spend efficiency.
Guides budget allocation decisions.

How to measure

Revenue from ads / Cost of ads.
Typically measured monthly or quarterly.

Details

ROAS is a key performance indicator for mobile engineers and growth teams to assess the effectiveness of advertising campaigns. By calculating the revenue generated per dollar spent on ads, teams can determine which campaigns are delivering the best returns. This metric is crucial for optimizing ad spend and ensuring that marketing budgets are allocated to the most profitable channels.

In a mobile context, ROAS can be influenced by factors such as user acquisition strategies, app store optimization, and in-app purchase dynamics. Understanding these factors helps in fine-tuning campaigns for better performance.

Examples & formulas

To calculate ROAS, use the formula: Revenue from ads / Cost of ads. For example, if a campaign generates $10,000 in revenue and costs $2,000, the ROAS would be 5:1.

ROAS = Revenue from ads / Cost of ads

Common mistakes

Ignoring indirect revenue streams; consider all revenue sources.
Focusing solely on ROAS without considering long-term value.