Return on Ad Spend (ROAS) is a commonly used marketing metric that helps to estimate the total amount of revenue generated per dollar of digital advertising spend. This metric is commonly used to check the efficiency of paid media campaigns. ROAS is similar to Return on Investment (ROI). However, while ROI can be used to check the efficiency of any investment, ROAS is primarily used to estimate paid media spend efficiency.
Return on Ad Spend (ROAS) = Net conversion value/ Net ad spendSuppose a SaaS company wants to know the efficiency of paid advertising on LinkedIn over the last 30 days. The company's ad spend in this category is $5,200 for 30 days. With Linkedin advertising, the company has managed to get 18 new customers in 30 days, equivalent to revenues of $18,000.Thus, Return on Ad Spend (ROAS) = $18,000/$5,200 = 3.46A ROAS of 3.46 means that the company is earning $3.46 per dollar of its Linkedin ad spend.