How ROAS impacts your marketing success

If you work with online marketing, you will inevitably come across the term “ROAS.” But what does it actually mean?

ROAS, like many other terms in the online marketing industry, is an abbreviation.

What does roas stand for?

ROAS stands for:

R – Return
O – On
A – Ad
S – Spend

In other words, return on ad spend.

ROAS tells you how much money you have earned back for every dollar you spent on advertising.

How to calculate ROAS

ROAS is commonly used when working with paid advertising such as Google Ads and Facebook Ads.

ROAS is calculated based on how much money you spent and how much revenue you generated.

Here’s a simple example:

If you spent 10,000 DKK on ads and earned 125,000 DKK in revenue, your ROAS would be:
Revenue / ad spend = ROAS | 125,000 DKK / 10,000 DKK = 12.5

What is the difference between ROAS and ROI?

It’s easy to confuse ROAS and ROI (Return on Investment).

However, the difference is quite clear. ROAS only measures how much money you earned back on your advertising budget, while ROI includes the entire investment.

This means you also factor in costs such as labor hours, ad design, and any additional expenses. Because of this, ROI will always be lower than ROAS.