Understanding ROAS: An Essential KPI for Optimizing Your Marketing Campaigns

What is ROAS?

ROAS, or  Return on Ad Spend, is an indicator that measures the revenue generated by each euro spent on advertising. It is calculated using the following formula:

ROAS= Advertising revenue / Advertising expenditure

For example, if an advertising campaign costs €1,000 and generates €5,000 in revenue, the ROAS would be 5. This means that for every euro spent on advertising, the advertiser has generated €5 in revenue.

Why is ROAS important?

1. Performance Evaluation

ROAS enables advertisers to evaluate the performance of their campaigns objectively. A high ROAS indicates that the campaign is profitable, while a low ROAS may signal efficiency problems. By focusing on this indicator, advertisers can quickly identify which campaigns, channels or strategies are working best.

2. Budget optimization

By tracking Return on Ad Spend, mobile marketing advertisers can allocate their budgets more strategically. For example, if they see that a campaign on an in-app advertising network generates a ROAS of 7, while a campaign on a social network achieves only 2, they can choose to redirect part of their budget to the better-performing campaign. This approach optimizes advertising spend while maximizing quality user installs and increasing overall campaign Return on Ad Spend.

3. Real-time adjustments

ROAS offers the possibility of making adjustments in real time. In a digital environment where market conditions can change rapidly, tracking this KPI enables advertisers to react immediately. For example, if the ROAS of a campaign starts to fall, the advertiser can test new creative, modify targeting or adjust the bidding to try to rectify the situation.

Addict Mobile offers a solution for optimizing your campaigns according to your KPIs. If the KPIs are not met, the campaign is automatically stopped and the budget reallocated to the best-performing campaigns, thus optimizing budgets while improving performance.

4. Making Informed Decisions

Return on Ad Spend isn’t just a number. It provides valuable information about consumer behavior. By analyzing campaigns with high ROAS, advertisers can identify trends, customer preferences and the times of day or year when consumers are most likely to buy. This data can then be used to plan future campaigns and develop more effective marketing strategies.

How to calculate and interpret ROAS?

Calculation

As mentioned above, calculating Return on Ad Spend is relatively straightforward. Advertisers need to make sure they accurately track the revenue generated by their advertising campaigns. This may include direct sales, qualified leads or other relevant conversions.

Interpretation

A Return on Ad Spend of 1 means that the advertiser is simply recouping its advertising spend, while a ROAS greater than 1 indicates profitability. However, the ideal ROAS can vary according to each company’s sector of activity and objectives. For example, in the e-commerce sector, a ROAS of 4 or 5 is often considered a good result, while other sectors may have different standards.

Checklist to monitor and optimize your ROAS

1. Define clear objectives

•  Set ROAS targets based on profit margins and business objectives.
• Identify secondary KPIs (CPI, CPA, CTR, etc.) that impact ROAS.

2. Implement precise performance monitoring

•  Set up conversion tracking via attribution tools (MMP, pixels, conversion API).
•  Connect your advertising platforms (Google Ads, Meta Ads, DSPs like Moloco) to a centralized dashboard.
• Segment data by audience, location, device and time.

3. Regular data analysis

• Identify campaigns or audiences with above- or below-average ROAS.
• Check for gaps in the user journey (landing pages, abandoned baskets).
• Compare ROAS by creative to identify those who perform better.

4. Optimize campaigns and audiences

• Audiences :
  • Remove poor performers.
  • Test lookalikes or segments based on high-value users.
•  Budget :
  • Redistribute budgets to the most profitable campaigns.
  • Set up automatic bidding campaigns to maximize conversions.
•  Creative :
  • Test variants created with a tool like CreaThor to quickly diversify your assets.
  • Update saturated visuals.

5. Optimizing bids and ad placements

• Use bidding strategies such as Target ROAS or manual optimization, depending on the platform.
• Favor investments that generate a good cost/commitment ratio.
• Test specialized DSPs (to explore opportunities outside traditional platforms).

6. Improve the post-click experience

• Optimize landing pages (speed, CTA, relevance).
• Simplify the purchasing process and reduce friction (payment, registration).

7. Test and iterate

• Implement continuous AB Testing on creatives, audiences and messages.
• Document learning to guide future campaigns.

8. Anticipating trends and developments

• Monitor advertising algorithm updates.
• Test new advertising platforms and formats to diversify revenue sources.
• Integrate predictive analysis to adjust your budgets in real time.

Conclusion

Return on Ad Spend is an essential KPI for any advertiser wishing to optimize their marketing campaigns. By measuring the return on every euro spent, companies can not only assess the effectiveness of their campaigns, but also adjust their strategies in real time to maximize ROAS. In a world where every euro counts, ignoring this indicator could mean missing out on significant opportunities for growth and profitability.

By integrating Return on Ad Spend into their performance dashboard, advertisers can make informed decisions, allocate budgets efficiently and, ultimately, deliver more profitable and effective marketing campaigns. Don’t wait any longer to start tracking your ROAS and see how it can transform your advertising strategy!