What is (ROAS) Return on Ad Spend?
(ROAS) Return on ad spend is an option provided by Amazon which helps to check the overall effectiveness of a specific sponsored ads campaign, product, ad group or targeting strategy. The availability of ROAS is for sellers and vendors in the Campaign manager and through downloadable reports.
How to Calculate (ROAS):
We calculate ROAS by dividing the For example, for the calculation of ROAS, you have to divide total sales generated by the advertising spend invested in the campaign (ROAS = Sales / Ad Spend).
Let’s understand this through an example given below.
If you spent $20 dollars on a sponsored ads campaign that generated $100 in sales, the ROAS will be 5.
The ROAS is the inverse of Advertising cost of sale (ACOS), and it can be calculated by dividing advertising spend invested by the total sales generated (ACOS = Ad Spend / Sales). ROAS is represented as a number that is interpreted as an index (multiplier) rather than a per cent (%).
The efficiency of ROAS:
When the ROAS is increasing, it is a clear sign of efficiency. Your campaign becomes more efficient as your ROAS increases. ROAS is the one metric which can be used for the measurement of the effectiveness of ad products, campaigns, and keywords.
Comparing ROAS over time will help you to provide insight into where additional resources should be allocated.