Can You Trust Your Gut? The Measuring Stick: Return on Ad Spend

If you have ever asked the following question, “How much is my advertising making me?” Then this is the metric for you! According to a study from Seybold, almost 70% of companies can’t measure ROI.

Imagine not being able to tell if your investments were paying off, you would probably very quickly replace your money advisor with someone who could give you accurate updates. Well your advertising should be handled the same way.
Return on Ad Spend (ROAS) This is a Marketing ROI which measures how much revenue was generated for each $1.00 spent. It’s calculated this way:

Revenue – Ad Spend
—————————- = ROAS
Ad Spend

$1000.00 – $100.00
—————————- = $9 ROAS
$100.00

or

$1000.00 – $500.00
—————————- = $1 ROAS
$500.00

Companies need to exercise utmost caution while spending money on advertising. It could help you scale up your sales or it could be a mere waste of money. Either way, one needs to keep a tab on the money spent on ads.

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