ROAS (Return On Ad Spend)
Revenue generated for every dollar spent on advertising — total ad-driven revenue divided by ad spend.
Definition
Return on ad spend (ROAS) is the revenue attributed to advertising divided by the amount spent on that advertising. A ROAS of 3 (or 3:1) means you earned three dollars in revenue for every dollar of ad spend. It's usually expressed as a ratio or a multiple.
Why it matters
ROAS is a headline measure of advertising efficiency. What counts as a 'good' ROAS depends entirely on your margins — a business with thin margins needs a much higher ROAS to be profitable than one with high margins. It measures revenue, not profit.
How it applies to UGC ads
ROAS tends to decay as audiences see the same ad repeatedly (see ad fatigue). Refreshing creative — for instance by generating new UGC variants with UGCABC — is one of the standard ways teams try to defend ROAS as a campaign matures.
Related terms
CPA (Cost Per Acquisition)
The average amount you spend on ads to get one conversion, such as a purchase or sign-up.
ReadAd Fatigue
The drop in performance that happens when an audience sees the same ad so often that it stops responding to it.
ReadCPM (Cost Per Mille)
The cost an advertiser pays per one thousand impressions of an ad — 'mille' is Latin for thousand.
ReadConversion Rate
The percentage of people who take a desired action — like buying or signing up — out of everyone who had the chance to.
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