ROAS Calculator

WebFX’s ROAS calculator helps you:

• Calculate your ROAS
• Calculate your break-even
• Interpret your results using AI

This information gives you the answers to questions like:

• How much revenue do I generate per ad dollar?
• What ROAS do I need to break-even?
• Are my current advertising efforts profitable?
• How can I improve my current performance?

AI helps interpret your results by considering:

• Your revenue vs. your advertising costs
• Your break-even vs. your ROAS
• Effective optimizations for improving ROAS

Pinning down a “good” ROAS is difficult, but in general, you want to have a ROAS that is over 100%. If you have a ROAS of 100%, you break even with your ad spend and your ad return.

A high ROAS is not necessarily good because ROAS measures revenue vs. profits. Businesses with tight margins and high average order costs can generate a good ROAS, but miss the mark on profits.

That’s why closed-loop reporting is critical to paid advertising campaigns (and something businesses will find within RevenueCloudFX).

ROAS stands for Return on Ad Spend. This metric measures the effectiveness of a paid advertising campaign or program by measuring the amount spend vs. the amount earned.

Break-even return on ad spend determines the minimum ROAS needed to avoid losing money on advertising. Your break-even ROAS is when your revenue from advertising is equal with its costs.

The return on ad spend formula used in our ROAS calculator is:

ROAS = (Money gained from ads / Money spent on ads) x 100

Break-even ROAS is calculated using the following formula:

Break-even ROAS = Average order value ÷ (Average order value – Average order cost)

There are a number of factors that influence your ROAS including:

Targeting
Targeting allows you to reach your most qualified audience with your ads, and if you don’t do it properly, you could be throwing your ad budget — and a good ROAS — out the window.

When you don’t target the right audience, interested users won’t see your ads, which means you might be creating ads for your target audience and but you’re delivering them to another, less interested, audience.

To target properly, be sure that you select and bid on keywords that your audience searches for.

You’ll also want to pay attention to whether you target short tail keywords or longtail keywords.

Short tail keywords are typically made up of one or two words and they target a very broad audience, whereas longtail keywords are longer, more detailed phrases that target an ultra-specific audience.

You’ll pay more for short tail keywords since they target that wide range of users, and you’ll typically pay exponentially less for long-tail keywords.

Here’s a breakdown of each keyword type:

• Short tail keywords: They cost more and you’ll rarely make a sale from ads that target these keywords. They cost more since a lot of companies want to earn sales from these broad keywords, and it’s hard to actually make a sale since users searching for these keywords likely aren’t ready to make a purchase anyway.
• Longtail keywords: They cost less and you’ll likely make sales from ads that target these keywords. They cost less since fewer companies offer the super specific product or service you’re targeting, and it’s easy to make a sale since users searching for these keywords are likely ready to convert once they find what they’re looking for.

Cost per click
Whether your cost per click (CPC) is too high or too low, neither bodes well for your ROAS.

If your CPC is too low, your ads might not reach to your target audience since you might not win the bidding auction for that specific keyword. And if it’s too high, your ads might reach the right audience (pending correct targeting), but you throw away your ad budget.

The best way to achieve a positive ROAS and an ideal CPC is to work with a full-service digital marketing agency like WebFX. Our team knows the ins and outs of achieving your perfect CPC and in turn, helping you reach your goal ROAS.

Landing page
Your landing page is the last, make or break element of an ad. Users see this page last before converting, so you must make it enticing, exciting, and engaging.

If you create less-than-desirable landing pages that don’t offer a clear CTA, information about your product, or the product price, you can kiss a sale and an increased ROAS goodbye.

It’s crucial that you create landing pages that turn skeptical shoppers into loyal customers. Include these landing page must-haves to increase chances of a sale:

• CTA
• Product price
• Product materials
• Product measurements
• Size options
• Color options
• Product images
• Product description
• Return policy
• Reviews