What is ROAS?

“ROAS” or “return on ad spend” is the amount of revenue a brand or company generates for every amount spent on an ad source. It provides you with a complete, big picture understanding of whether or not a campaign is paying off. ROAS is mostly expressed in ratio. An example of this could be, if you have a brand of your own and you make $10 for every $1 spent on an ad campaign.

This would mean that your ROAS for the campaign is 10:1. Apart from ROAS, you are most likely to find out other necessary metrics such as CTR or click-through rate and ROI. These metrics give you an understanding of the overall monetary success of your ad campaign. When you measure multiple metrics, you get an even more accurate view of the results.

As a marketer, using data to analyze and calculate the effectiveness of a campaign is a crucial part of the job. We understand that calculation and analysis can be overwhelming as well as complicated. Also, what if math is not your strong suit? For these endless data related problems, there is now one simple solution.

When it comes to brand campaigns, the one calculation that is of utmost importance is- knowing the metrics of tracking the return on ad spend (ROAS). ROAS or return on ad spend is nothing but a metric that evaluates the performance of your cost of advertising.

What is the difference between ROAS and ROI?

A brand or a company may make a comparison of their ROAS at different stages of the ad campaign, along with various other advertising sources. This is done to test a new ad source, because keeping a track of your performance and return on ad spend will help you determine the changes that need to be made in the ad campaign.

While the total return of the overall investment is measured by return on investment (ROI), the return on advertising spend (ROAS) just calculates the return in regard to one particular ad campaign. So basically, ROI can be called as a bigger metric while ROAS is a particular metric that measures the success of one particular ad campaign.

What does the online ROAS calculator do?

ROAS calculator helps you evaluate return on ad spend, a key metric that indicates the effectiveness of paid ads.

Who is the ROAS calculator for?

The ROAS calculator is a useful tool for calculating return on ad spend for brands in the D2C industry. Why so? As a D2C brand, you might be confused regarding the sale or the distribution percentage of your products in the market- whether you would want it to be sold in the marketplace or in your in house site.

This ROAS calculator, hence, will help any D2C brand identify the best possible combination for placing their products in the marketplace and D2C, to maximize the revenue and reduce the spend.

What are the benefits of using the online ROAS calculator?

1. Getting a better insight into your ad campaign: Just how a person requires treatment when they fall sick, similarly your ad campaign too needs treatment if it is not producing the desirable results. As a person when we have fever or cough, we know that they are the first signs of illness. When it comes to an ineffective ad campaign, the initial sign of ‘illness’ is low ROAS.
   
   By getting an insight into the important ad campaign metrics such as how much amount the ads generate as well as how much your brand needs to spend on ads, you will be able to calculate the ROAS percentageand improve the effectiveness of the overall ad campaign.
   
   The Media Ant’s online ROAS calculator  will help you to calculate the ROAS for your brand in a simple and easy way. If the estimated ROAS is less than 1, it means that you need to rethink the campaign. And if it is more than 1, continue doing but do not let off the gas.
   
   
2. It will keep you aware: You cannot possibly use a ROAS calculator without the necessary ad campaign metrics. By using our online ROAS calculator for your advertising campaign, you will be able to get a better understanding of the ignored and overlooked campaign metrics.
   
   For example, you will get to know how much of the amount you must spend on marketplace and D2C, as well as for branding and performance. One of the long-lasting benefits of using the return on ad spend calculator is that it will force you to be well aware of the important advertising campaign metrics like revenue vs. spend.
   
   
3. You will not be worried about miscalculations: A free ROAS calculator like the one we provide will be a great way to see that no miscalculations occur in a metric, as important as the ROAS.
   
   Miscalculations are quite common when it comes to so many numbers, and if this occurs you might end up with incorrect ROAS and a misjudged ad campaign. When you use a return on ad spend calculator, it guarantees you the accurate result every time.
   
   

What is the difference between D2C and marketplace?

Marketplace: A marketplace can be defined as any kind of location, be it in person or online, that helps to facilitate the exchange of goods between the buyers and sellers. A marketplace may offer any kind of business transaction, that is the product can range from cars, athletic equipment, electronics to kitchen appliances.

The major reason why companies and brands go to the marketplace is because they help in bringing high demand products to the consumers, who are driving the purchase trends.

There are 2 Types of Marketplace:

1. Online marketplaces
2. Offline marketplaces-
   1. Retail stores
   2. Street vendors
   3. Industry trade stores

D2C: Direct-to-Consumer companies or brands are those who manufacture and ship their products directly to the consumers without relying on any middlemen or traditional stores.

For example, Pepperfry which is India’s one of the most popular online furniture shops. They sell their products directly to consumers through their official website and their stores.

What input does The Media Ant’s ROAS calculator require?

To use The Media Ant’s ROAS calculator, the user would have to enter some details that would help them get the estimated return on ad spend.

These details include-

1. Information about the brand- This is the first section which appears as soon as the user opens The Media Ant’s online ROAS calculator. In this section, the user would have to enter details like the ‘Brand name’, ‘URL’ and ‘Brand category’. After entering the required information, clicking on the ‘Next’ button would take the user to the second section called ‘Portfolio Share and metrics’.
2. Portfolio share and metrics- This section of the online ROAS calculator is divided into two parts- Marketplace and D2C. Here, you would be required to fill in other details like ‘Average order value’, ‘Share percentage’, ‘CPC’ and ‘Spend split’ according to the requirement of their campaign.‘Share percentage’ means the percentage of customers of a brand that are either organic, repeat or new. ‘Spend split’ is nothing but the percentage of branding and performance that a particular campaign is aiming for.
3. Conversion percentage and Spend of the brand- After you have put the details in the portfolio share and metrics section of the ROAS calculator, you would come to the next section called ‘Conversion percentage and Spend’. Here, the first thing you would be required to fill will be your budget, i.e, the expected sales (unit). The next input would be the conversion percentage details- both for marketplace and D2C, which would need to be filled separately. The sections include ‘organic’, ‘repeat’ and ‘new’.

What is the process of using The Media Ant’s ROAS calculator?

Like we mentioned above, using the online ROAS calculator is quite simple and easy. These are the following steps that the user has to go through in order to use the ROAS calculator:

• Filling in the About section of the brand.
• Filling the Portfolio Share and Metric details.
• Filling in the Conversion Percentage and Spend of the brand.
• Results

Step 1: About your brand

The user is required to mention all the relevant information related to their brand like, ‘Brand Name’, ‘Brand URL’ and ‘Brand Category’ (from the drop down box). Make sure you do not miss out on filling any of the blanks in the first page of the ROAS calculator.

• Brand name- This is the first input that you would need to put in the ‘About section’ of the ROAS calculator. A brand name is nothing but an official name given by the manufacturer or an organization to their particular product or service. For example, let’s take the brand ‘P&G’.
• Brand URL- After entering the Brand name, the second step is to insert the Brand URL, which is a shortened URL that is built around your brand name or a related term which helps in associating the company with the content that you share. For example, www.P&G.com
• Brand category- The third and the final step in the ‘About Section’ of the online ROAS calculator is to mention the brand category from the drop down box. You would have ample options to pick from the drop down menu, like automobile, agriculture, lifestyle, finance, FMCG, Healthcare, real estate, travel and tourism, transportation, etc.
• After filling in all the information, click NEXT.

Step 2: Portfolio share and Metrics

• As soon as you click NEXT, the portfolio and metrics page of the ROAS calculator will open in front of you. In this page, you will be required to mention the portfolio share, i.e, ‘Marketplace’ and ‘D2C’ for your brand. The Media Ant online ROAS calculator makes it even easier for you to adjust the percentage of portfolio share with the help of a slider. For example, a FMCG brand like Ariel which is a popular detergent brand may want to keep its marketplace share as 70% and D2C share as 30%. You can select and adjust this option as per your brand preference and requirements.
• You would then have to insert the details for both Marketplace and D2C respectively. The first being the ‘Average Order Value’ which is the average amount spent every time a consumer places an order on the website or mobile app.
• Next you need to select the share percentage for ‘Organic’, ‘Repeat’ and ‘New’ with the help of the slider.
• The next step is to put the CPC that is Cost-per-Click in rupees for organic, repeat and new.
• The final step is to split your ad spends on the basis of ‘Branding’ and ‘Performance’ based on what is your brand’s primary objective.
• Click ‘NEXT’

Step 3: Conversion Percentage & Spend

• Budget- After you have put the details in the portfolio share and metrics section, you would come to the next section called ‘Conversion percentage and Spend’. Here, the first thing you would be required to fill will be your budget, i.e, the expected sales (unit).
• Conversion percentage- The next detail is the conversion percentage for marketplace and D2C, which would need to be filled separately. The sections include ‘organic’, ‘repeat’ and ‘new’.
• Click ‘CALCULATE’.

Step 4: Return on Ad Spends (Results)

• After clicking on ‘CALCULATE’, you will get the ROAS for your brand based on your inputs.
• The ROAS result will be displayed on the screen, which will include:
  1. Spend pattern: The spend pattern will give you an overview of the amount that you would need to spend for branding and performance, in marketplace and D2C. The graph will also give you an estimated amount of the total revenue for your brand campaign.
  2. Total Revenue: You will get the ad spends in INR for both marketplace and D2D, as well as the total revenue that will be required for your brand campaign.
  3. Platform ROAS: The return on ad spend calculator will also help you in determining the amount you should spend on the individual platforms as in, for marketplace and D2C.
• After you’ve received the required data, you may download the PDF format of the report for future reference.

What is the output (result) of the online ROAS calculator?

The result of the Media Ant’s online ROAS calculator will be displayed on the screen, which will include the following points:

1. Spend pattern: The spend pattern will give you an overview of the amount that you would need to spend for branding and performance, in marketplace and D2C. The graph will also give you an estimated amount of the total revenue for your brand campaign.
2. Total Revenue: You will get the ad spends in INR for both marketplace and D2D, as well as the total revenue that will be required for your brand campaign.
3. Platform ROAS: The ROAS calculator will also help you in determining the amount you should spend on the individual platforms as in, for marketplace and D2C.

After you’ve received the required data, you may download the PDF format of the report for future reference.

How do I get to The Media Ant’s online ROAS calculator/ return on ad spend calculator?

Follow the steps for using The Media Ant’s online ROAS calculator-

1. Go to our website (link- www.themediaant.com)
2. On the search bar (top center) type ‘ROAS’
3. From the drop down menu, click on ‘ROAS calculator’. A page titled ‘Advertising in ROAS calculator’ will open up.
4. As you scroll down, you will see a section titled ‘Top Choice’, under which you would see a Trial package. Click on the ‘know more’ button and you will find all the required details of the ROAS calculator.

Or you can simply click on the following link to go to The Media Ant’s ROAS calculator (also known as return on ad spend calculator) - https://www.themediaant.com/digital/roas-calculator-advertising

FAQs related to ROAS Calculator

1. How to calculate ROAS?
   
   The money that an advertiser spends on digital advertising is an investment on which they are tracking returns. Therefore it is natural to know how much revenue does your business earn from the money you spent on advertising.
   
   As long as a business has an idea as to how much they are earning and spending, they can calculate their ROAS.
   
   ROAS equals your total conversion value divided by your advertising cost. Or in simpler terms, its Ad Revenue/Ad spend= ROAS. Conversion value is the amount of revenue that your business earns from any given conversion. If you sell a product worth Rs 500 and it costs you Rs 100 on that one unit, your ROAS will be Rs 5.
   
   
2. How to calculate your break even ROAS?
   
   Break even ROAS is the return on investment that allows a business to cover the cost of the advertising campaign, at the same time also taking into consideration the profit margin of the product/service sold through the ads of a business.
   
   Here’s the formula to calculate your break-even ROAS: Break-even ROAS = 1 / Average Profit Margin %
   
   Here the formula for calculating the average profit margin and its percentage:
   
   
   1. Average Profit Margin = Average Order Value - Average Order Costs
   2. Average Profit Margin % = Average Profit Margin / AOV x 100
      
      
3. How to calculate return on ad spend?
   
   ROAS equals your total conversion value divided by your advertising cost. Or in simpler terms, its Ad Revenue/Ad spend= ROAS.
   
   Conversion value is the amount of revenue that your business earns from any given conversion. If you sell a product worth Rs 500 and it costs you Rs 100 on that one unit, your ROAS will be Rs 5.
   
   
4. What is ROAS or return on ad spend?
   
   “ROAS” or “return on ad spend” is the amount of revenue a brand or company generates for every amount spent on an ad source. It provides you with a complete, big picture understanding of whether or not a campaign is paying off.
   
   ROAS is mostly expressed in ratio. An example of this could be, if you have a brand of your own and you make $10 for every $1 spent on an ad campaign.This would mean that your ROAS for the campaign is 10:1.
   
   ROAS can help an advertiser figure out which ad campaigns are truly driving results and how can a business improve its future online advertising efforts based on the ad groups and keywords working well presently. Plus, based on ROAS, a business can also refine their ad spend to generate the most revenue.
   
   
5. Why Your Ads Agency Should Use ROAS to Measure Success
   
   There are many reasons why your company should use ROAS to measure success:
   
   
   1. To get a better insight into your ad campaign: Just how a person requires treatment when they fall sick, similarly your ad campaign too needs treatment if it is not producing the desirable results. By getting an insight into the important ad campaign metrics such as how much amount the ads generate as well as how much your brand needs to spend on ads, you will be able to improve the effectiveness of the overall ad campaign.
   2. It will keep you aware: You cannot possibly use a ROAS calculator without the necessary ad campaign metrics. By using our online ROAS calculator for your advertising campaign, you will be able to get a better understanding of the ignored and overlooked campaign metrics.
   3. You will not be worried about miscalculations: A free ROAS calculator like the one we provide will be a great way to see that no miscalculations occur in a metric, as important as the ROAS.
      
      
6. What is Return on ad spend formula
   
   As a marketeer, you might want to know how much of the amount you must spend on marketplace and D2C, as well as for branding and performance. One of the long-lasting benefits of using the return on ad spend calculator is that it will force you to be well aware of the important advertising campaign metrics like revenue vs. spend.
   
   The formula for ROAS is as follows- ROAS equals your total conversion value divided by your advertising cost. Or in simpler terms, its Ad Revenue/Ad spend= ROAS. Conversion value is the amount of revenue that your business earns from any given conversion. If you sell a product worth Rs 500 and it costs you Rs 100 on that one unit, your ROAS will be Rs 5.
   
   
7. What affects your ROAS?
   
   There are a few factors that affects your ROAS:
   
   Factor 1: Brand & category maturity
   
   It is important for the brand to be well known amongst the consumers, because the more mature the brand and category is the faster it will achieve a steady ROAS. If the brand is new it will naturally take time for consumers to build trust and credibility, hence the ROAS will be a bit slow paced.
   
   Factor 2: A strong product, brand & website
   
   Make sure that when you target the ideal customers for your product, and they do not land in a clunky website which looks untrustworthy and unprofessional. Your website must be creative and attractive, to get the ultimate conversion rate.

What is an ROI calculator?

ROI calculator or return on investment calculator will show you the return from your investment or ad spends. It will help you to choose your best investment across various investment options. You can evaluate the spends or investments based on the financial goals and risk tolerance.

You may even gauge the cost of the spends or investment and look for the hidden charges that could be affecting your returns. The return on investment or ROI is generally expressed as a percentage. In basic terms, the ROI also known as return on ad spends is a financial measure that will help you to determine the advantages of your investment against the costs.

An ROI calculator is the simulation that will help you to gauge the profitability and effectiveness of your investments. You can use the ROI calculator online in order to determine your ROI or return on investments across different periods of time.

The ROI calculator will consist of various parameters which you will have to fill as per your requirements. You will get the ROI calculator online which will show you the total profit on your investments. It will also show you the absolute return on investment for various platforms, like marketplace or D2C.

ROI Calculator or return on investment calculator can also be determined through a simple mathematical formula that marketers, advertisers and investors can use to get and evaluate the investments and judge how well your ad campaign or investment has performed in comparison to others. An ROI calculator online can sometimes be used with other approaches that are to develop your business and determine the effectiveness of your marketing campaign.

The total ROI for your business can be used as a great way to grade how well your company can be managed.

How to calculate ROI?

You must be wondering how to calculate ROI, which may seem like an overwhelming task which is loaded with a big assumption. When it comes to the ROI calculation formula it is assumed that the overall month-over-month sales growth is directly related to the marketing campaign.

For a marketing or advertising campaign to have a real meaning, it is important to have parameters for comparison. Monthly comparisons, that is specifically the sales from your business line prior to the launching of the campaign- this will help you impact the ROI more clearly.

Talking about the ROI calculation formula, to know the real impact can be a bit critical. By using the 12-month campaign lead up, you will be able to calculate your existing sales trend.

If your sales are seeing an organic growth of 4% per month on an average in the last 12-month period, then the ROI calculation for your advertising campaign will strip out 4% from your sales growth.

The most simple and easy way to calculate the ROI or return on investment of a marketing or advertising campaign is to integrate it into the overall business line calculation.

Here’s a simple and quick way to calculate the ROI of your ad campaign;

The first step is to take the sales growth from the business or product line, and subtract the marketing costs, and then divide by the marketing cost.

The ROI Calculation formula is;

     (Sales Growth - Marketing Cost) / Marketing Cost = ROI

For example, if your sales have grown by Rs1,000 and your marketing campaign costs Rs100, then the simple ROI is 900%.

     ((Rs1000-Rs100) / Rs100) = 900%

You can calculate the ROI or return on investment using this formula: ROI = Net Profit / Cost of the investment * 100

If you are an advertiser or investor, the return on investment or ROI will show you the profitability of the investments. If you invest the money in ad campaigns, the ROI or return on investment will show you the gain from the marketing or ad campaigns.

ROI or return on investment may be positive or negative. If the ROI or return on investment is negative, then you may be actually losing the money on the ad spends or investment. You should pick the ad spends or investment that will offer you the maximum return over a period.

Now you know a quick and amazing way on how to calculate ROI for your ad campaign.

How to use the ROI Calculator online:

To use ROI Calculator: The Media Ant ROI Calculator will show you the return on your investments. To use The Media Ant ROI Calculator:

• You must enter the About section of the brand.
• Filling the Portfolio Share and Metric details.
• Filling in the Conversion Percentage and Spend of the brand.
• The Media Ant ROI Calculator will show you the profit on your investment. It will even show you the absolute return on the investment and the annualized return on your investment.
• The Media Ant ROI Calculator will also show you the absolute return and the annualized return on your investment. You can even calculate the return on the investment across different holding periods.

Benefits of The Media Ant ROI Calculator:

• The ROI calculator online will help you to pick the right investment based on the financial goals as well as risk tolerance.
• The ROI calculator also helps you to select the best measures to undertake for your campaigns based on the performance of your ad campaign over different periods.
• You can even measure the worth of your investment against the benchmark.
• You may measure the profit from your investment against the cost of the investment.