Use our free Return On Ad Spend (ROAS) calculator to estimate your ROAS percentage and enable Advanced Mode to factor in your profit margin for an accurate projection of your ROI.
What is ROAS?
Return On Ad Spend (ROAS) assesses the effectiveness of your marketing campaigns by showing you how much revenue you are generating for every pound you spend on ads.
You can easily calculate ROAS using our free ROAS calculator. Input your revenue and ad spend figures, and our free calculator will instantly work out your Return On Ad Spend as a percentage – without asking for your email address.
You can then take this percentage and use decimal points to get your ROAS figure – a 256% ROAS equals an ROAS of 2.56, an 800% ROAS figure equals an ROAS of 8, and so on. The higher the number, the greater the return.
We love using ROAS because we can set the timescale for measuring it, be it two weeks or two months, letting us measure performance over the short and long term.
Knowing your ROAS lets you decide where to spend your marketing budget. If one ad campaign has a higher ROAS, you might shift the budget to the higher-performing campaign to earn more revenue.
How Our ROAS Calculator Works
First, input your total revenue generated from the ad campaign, including all sales, leads, and other conversions driven by the campaign.
Next, input your total advertising spend over the same period, including costs like ads, creatives, agency fees, etc.
Our ROAS calculator will then divide your total revenue by total spending to calculate your ROAS and provide an accurate ROAS percentage.
Why is ROAS Important?
Measuring ROAS with our calculator is crucial for several reasons:
How to Calculate ROAS
When calculating return on ad spend (ROAS), we look at how much revenue your ads drive versus how much you spend on them. So, let’s say your campaign brought in £10k in sales, and you spent £2k on the ads. To get your ROAS, you’d divide the £10k by the £2k. That gives you an ROAS of 5. For every £1 you put into ads, you get £5 back in revenue. Not bad! The higher the ROAS number, the better your ads are performing. A high ROAS means your marketing spend is paying off big time.
Our ROAS calculator takes this further to find your Return on Investment (ROI) by factoring in profit margins. The calculation is simple – if your profit margin is 25%, our calculator multiplies your ROAS by 0.25. So, if your ROAS is 5, and your profit margin is 25%, your ROI is 5 x 0.25 = 1.25. This gives you your actual return.
What is a Good ROAS?
Aim for more than 100%
At a basic level, a good ROAS is greater than 100%. This indicates that for every £1 you spend on advertising, you’re making back at least £1 in revenue.
A ROAS of 100% means your ad spend is “breaking even”, which at least means you aren’t losing money on paper. The reality is that when you factor in overheads, a 100% ROAS is not sustainable because it costs you money in the long run.
200% is considered excellent
Although 100% is a good ROAS benchmark, you are in business to make money, not just claw it back with breakeven campaigns. A ROAS of 200% or more is the benchmark we aim for, as this means getting £2 back for every £1 spent.
Many of our customers see a ROAS of 500% or more. For example, an online fashion retailer client makes a 512% ROAS – or £4,000 for every £781 spent. We achieved this by tweaking existing ads in response to a ROAS below 200%.
ROAS Varies by Industry
Acceptable ROAS can vary significantly by industry. For example, subscription-based businesses like SaaS companies often see higher ROAS figures – up to 1,000% – because they generate recurring customer revenue.
We recommend aiming for a ROAS of 2 to 3 in most industries, growing to 5 for software, subscriptions, and high-value items like yachts and gold. Use our ROAS calculator today to find out whether you are on track.
How To Improve ROAS