E-commerce ad spend increased by 40% in Q2 of 2019 alone. Yet it’s becoming more and more costly to acquire customers online. According to Hubspot research, the cost of customer acquisition has increased by 50% in the last 5 years.
It’s more important than ever to invest your ad spend wisely. But with so many channels to choose from, how do you know which ones are best? It all comes down to knowing how much you’re getting back from every dollar spent across your ad channels. Also known as your return on ad spend.
What is return on ad spend?
Return on ad spend (ROAS) is the metric digital marketers use to determine the effectiveness of their advertising spend. ROAS is key to knowing how to best allocate marketing investment.
How to calculate ROAS
The ROAS calculation is a pretty straightforward one: Divide revenue attributed to advertising by the amount invested.
Revenue / Cost = ROAS
While the calculation itself is straightforward, figuring out how to approach it and activate your findings isn’t. We hear from founders all the time wondering how to calculate and use the ROAS metric more effectively.
So we asked experts at some of our preferred partner agencies 3 questions around measuring and optimizing ROAS:
- What’s the best approach to measuring return on ad spend (ROAS)?
- What are some tactics e-commerce companies can use to improve ROAS?
- Any words of warning when it comes to thinking about ROAS?
Expert round-up: Measuring ROAS effectively
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