Return on ad spend (ROAS) measures how much revenue you earn for every unit of currency you spend on advertising. You calculate it by dividing the revenue generated by a campaign by the amount you spent on it.
Why it matters to you:
- It tells you whether paid promotion is actually paying for itself. If a campaign earns back more than it costs, it is working; if not, you adjust or stop.
- It lets you spend with confidence. Once you know a campaign is profitable, you can invest more into it deliberately.
- It keeps you honest. Paid ads can feel busy and impressive, but ROAS cuts through to whether they make you money.
How to think about it in practice:
- For a transactional campaign, such as promoting a live print drop, ROAS is easy to read: the sales it drove divided by the spend. Above break-even means it is profitable.
- Some advertising builds long-term value instead, such as growing your email list or your reach. The payoff there is harder to see immediately, so judge it on the value of new subscribers and engagement over time, not on instant sales alone.
What to do next:
- Decide the goal of each campaign before you spend: immediate sales, or long-term audience growth.
- For sales campaigns, track revenue against spend and keep only what comfortably earns its keep.
- For growth campaigns, measure email signups, reach, and engagement, and weigh those against cost.
Clear goals plus honest measurement turn ad spend from a gamble into a controllable investment.