ROAS Calculator: How to calculate your return on ad spend and improve it

roas calculator for paid adverts

Are you investing in paid advertising? It can be a great way to increase leads, and sales, so is a worthwhile investment. However, tracking your paid campaigns and their impact on your bottom line is essential.

If you’re spending more money than you’re generating in revenue, then you need to look into what isn’t working and how you can improve it.

Here, we run through how to calculate your ROAS, and share some easy tips to improve your return on investment on paid advertising.

 

ROAS Calculator: How to calculate your return on ad spend

Return on advertising spend, or ROAS, is the amount of revenue you receive for every dollar spend on advertising. You can calculate ROAS across all of your advertising channels, or break it out channel by channel.

The higher your return on ad spend, the more effective the ad source is.

To calculate return on ad spend, use this formula or our ROAS calculator below:

 

ROAS = (Revenue derived from ad source)/(Cost of ad source)

 

What is ROAS?

ROAS, or return on advertising spend, is a marketing metric used to measure the performance of your paid advertising campaigns.
This metric is essential to track, if you’re using paid as part of your marketing strategy, as it allows you to track the effectiveness of campaigns based on their impact on your bottom line.

Our ROAS calculator will help you understand your ROAS, and see what profits your advertising is bringing in.

For example, if you spend £1,000 on paid advertising across a variety of channels, and found these ads brought in revenue totalling £5,000, then your ROAS would be:

£5,000/£1,000 = 500%

If you then break down your ROAS by each channel, you can identify which are working hardest to bring you revenue. Then, you can push more budget into what you know is working.

 

What if your sales complete offline?

Do you rely on a sales team to convert your leads offline? Whether you convert users over phone, email or in store, there are ways to track and measure your conversions and ad impact on revenue generation.

Read our blogs on PPC conversion tracking, in particular, offline conversion tracking, to find out how to implement proper targeting of your adverts.

 

Ruler Analytics can help you track ad impact on your offline conversions, by both tracking leads and revenue generation.

Here’s how it works:

Ruler tracks visitors to your website across multiple sessions, until they convert into a lead.

Ruler Analytics can track conversions over phone call, via form submissions and even live chat. At this point, Ruler will fire all of the data it holds onto that lead into your CRM.

There, you will be able to see the customer’s full marketing journey.

Ruler will continue to track visitors and leads to your site. At the point of sale, again, whether that’s online or offline, Ruler will fire the revenue data into your analytics tools.

So, whether you use Google Analytics or Ads, you can see how much revenue each marketing channel, campaign (and even keyword), is generating.

 

How to improve your ROAS

Now you’re tracking all touchpoints of your marketing campaigns, you can easily attribute online and offline conversions to marketing channels, campaigns and even keywords.

 

Editor’s Note: We’re gonna skip to the juicy stuff. We can help you improve your ROAS by highlighting the key data you’re currently missing.

No matter if a user takes steps online or offline, ie fills a form, calls you, emails you, Ruler can track their journey and, when they become a customer, attribute that sale back to the marketing channels, campaigns and keywords that influenced it.

Book a demo today to find out how to get started with marketing attribution.

book demo - banner 001 - www.ruleranalytics.com

 

Using your ROAS calculator, you can then optimise your campaigns by:

 

Turning off ads that aren’t impacting revenue

By using marketing attribution tools like Ruler, you can determine which ads, and even keywords, are resulting in more revenue.
Even if you use offline conversions, like phone calls, email or store visits, we can help you monitor what ads are working, and what aren’t. You can then make informed decisions on what to give more budget, and what to turn off.

 

Testing your ad campaigns more effectively

Testing on paid can always be a little scary. However, when you have proper tracking setup, you can see the true impact of small changes. And you would be surprised by how much a small change can impact lead conversion.

Test out ad copy changes, add extensions, trial new keywords. By monitoring your ad performance both within the native tools, and marketing attribution tools like Ruler, you can build up a strong profile of what works for your audience.

 

Smart bidding

Smart bidding is a feature offered by Google Analytics which allows you to pass the reins over to Google. Forget manual bidding, and fighting for keywords that you don’t know work. By using smart bidding, Google’s machine learning will optimise your bids and keywords based on your chosen strategy.

We spoke to Odolena Kostova, Google Account Manager, for her insight to smart bidding whether you’re a total novice, or seasoned expert.

 

Seeing your ad campaigns holistically

Your ads might not be sending users directly to conversion. They might however be working to drive awareness of your brand. If you can’t see the full customer journey of your users, then you can’t fully understand the role that paid advertising plays in your marketing.

By using marketing attribution tools like Ruler Analytics, you can see all of your users’ touchpoints. This is essential to be able to view your paid advertising holistically. Especially if you use offline conversions, a user might not convert into a lead via the first touchpoint.

But, a paid ad might drive awareness, for them to later return via organic social, direct search or more.

 

And there you have it. Use our ROAS calculator to understand how your paid advertising is working on your bottom line. Then, install Ruler Analytics into your marketing reporting so that you can understand the role paid advertising has across the customer journey.

Interested in learning more about Ruler Analytics? Book a demo today, or download our eBook on closed-loop marketing attribution and find out how it can help you connect the dots between your offline sales and users’ online searches.

book demo - banner 001 - www.ruleranalytics.com

Written by

Digital Marketing Manager at Ruler Analytics with experience in SEO, content marketing and social. After working both in-house for a travel firm and at an agency, I help people (who used to be me) attribute their revenue to their marketing efforts.