ROAS stands for Return on Ad spend. It is a metric that measures the revenue earned for every ad spend. ROAS is the ratio of the revenue generated from an ad campaign to the amount spent on that campaign.
ROAS= Revenue from an ad campaign /Amount spent on that campaign
A Healthy app performance depends on a positive ROAS which is in line with other metrics like user retention and ad revenue. Sometimes the amount spent on the campaign includes other expenses apart from the actual cost spent on the ad platform.
These costs include:
Salary cost: Salary of in-house or contracted person who managed the ad.
Vendor cost: Fees from the vendor who facilitated the ad campaign.
Affiliate cost: Affiliate network fee or individual affiliate commissions Calculating ROAS based on the ad cost and a separate one based on additional expenses will help compare and analyze the campaign’s profit. Return on Investment (ROI) and Return on Ad Spend (ROAS) is the most critical metrics for advertisers. ROI measures the overall profit of an app while ROAS helps to determine exactly how advertising is contributing to the profit of an app.