Of course, you want your ad campaign to be as effective as possible. ROAS is one of the methods by which this is possible. Curious about the meaning of ROAS and how it works? Here we discuss this concept in detail.

What is ROAS?

ROAS is a method for determining the effectiveness of a campaign. ROAS stands for Return On Advertising Spend. This method makes it easy for a company to determine which approach is effective and how it affects its online marketing strategy.

Heights of ROAS and is this healthy?

Return on ad spend (ROAS) is a marketing measure used to measure the effectiveness of an online ad campaign. ROAS helps online businesses determine which methods are effective and how to improve.

However, it is important to note that what is considered a “good” ROAS can vary greatly depending on the industry, business type, purpose of the campaign, type of product or service, and other factors. Below is a general format that can help you assess how your ROAS is performing.

1:1 or lessLow – you earn less or equal to what you spend on ads. This means your ad campaign is not profitable and there is room for improvement.
2:1 to 5:1Average – this is often seen as a “break-even” point for many companies, especially in high-cost and/or highly competitive industries. Although it shows that you earn more than you spend, you should still strive to improve.
5:1 and aboveHigh – this is generally considered an excellent ROAS. It means that you earn significantly more than you spend on ads, indicating a very effective ad campaign.

Please note that these figures are only general guidelines. Depending on your company’s margins and operating costs, a “good” ROAS may look different to you.

Calculating the ROAS is how you do it

ROAS gives you a ratio of revenue to cost of an Internet marketing campaign. With ROAS, you calculate how much ad money generates revenue for the business. The higher the ROAS, the better. You calculate the ROAS as follows:

ROAS = (Total conversion value – Total ad cost)/ Total ad cost

Suppose: with 30 orders through the webshop, the revenue (the conversion value) totals €2000. You’ve invested €100 in a Google Ads Campaign. You then calculate the ROAS like this:

ROAS = (2000 – 100)/100 = €19

So every euro invested in your campaigns will generate €19. If the ROAS is lower than 1, then you are spending more on ads than it is bringing you.

ROAS | Glossary of terms

The impact of ROAS on SEO

The ROAS helps to set up your campaigns in a profitable way. This does mean that your campaign must be in order and, in addition, your website must be running well. A good ROAS certainly impacts the SEO of your website, but vice versa, a good SEO is also indispensable for a successful ad campaign.

My advice

There are several ways to optimize your website’s e-commerce, and ROAS is one of them. While ROAS is not all-important, it is certainly smart to look into this. We recommend using ROAS as a starting point for your campaign. This allows you to drive profits directly, get clarity quickly and have the ability to optimize conversions. ROAS allows you to calculate the costs and revenues of a campaign as part of your online strategy.

Frequently Asked Questions

What is ROAS?

ROAS, Return On Advertising Spend, is a particular method by which you can measure the effectiveness of a marketing campaign. Using the ROAS method, you can easily determine which marketing activities are having an effect and their impact on the marketing strategy.

What is the impact of ROAS on SEO?

The ROAS method supports you to create effective marketing campaigns. For this with you do have an optimized website. So we can say that ROAS does have some impact on SEO.

Senior SEO-specialist

Ralf van Veen

Senior SEO-specialist
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I have been working for 10 years as an independent SEO specialist for companies (in the Netherlands and abroad) that want to rank higher in Google in a sustainable manner. During this period I have consulted A-brands, set up large-scale international SEO campaigns and coached global development teams in the field of search engine optimization.

With this broad experience within SEO, I have developed the SEO course and helped hundreds of companies with improved findability in Google in a sustainable and transparent way. For this you can consult my portfolio, references and collaborations.

This article was originally published on 11 October 2023. The last update of this article was on 17 January 2024. The content of this page was written and approved by Ralf van Veen. Learn more about the creation of my articles in my editorial guidelines.

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