Note: This tool calculates monthly revenue, average monthly cost, ROAS (Return On Ad Spend) and ROI (Return On Investment). It does not take into account the costs of ad account management fees.
ROAS
Revenue / AdSpend
Acceptable ROAS will differ from one company to the next based on its individual profit margins, overall business health, and operating costs. While some companies might struggle to make ends meet with a ROAS of 10, there are others who thrive with a ROAS of just 2.
A common goal to shoot for is 4. By hitting this target, the ad campaign should not only be effective, but you will also be generating a decent amount of revenue.
*ROAS does not take into account product costs.
ROI
(( Revenue – Expenses ) / Expenses ) x 100
One of the biggest differences between ROAS and ROI is that ROAS is a ratio derived from comparing how much you spend to how much you earn, while ROI accounts for the amount you make after paying your expenses.
The sole purpose of ROI is to determine whether the campaign is worth the investment or not. By taking the margin into account, you can quickly determine your overall profits and determine what your actual ROI is.
*Expenses includes AdSpend and product costs.