Return on Ad Spend (ROAS) is a key metric used in digital marketing to measure the effectiveness of advertising campaigns by comparing the revenue generated from ads to the cost of running those ads. Pay-per-click marketing platforms such as Google Ads and MSN Advertising allow advertisers to choose target ROAS (tROAS) as an automated bidding strategy that maximizes conversion values. This can be helpful for brands driving paid traffic to conversions that generate measurable ROI.
It is typically expressed as a ratio, where a higher ROAS indicates a more profitable campaign. For example, if a company spends $1000 on ads and generates $5000 in revenue, the ROAS would be 5:1. ROAS helps marketers assess the return on investment (ROI) for each dollar spent on advertising, allowing them to optimize budgets and improve campaign performance.