How to calculate ROAS

calculate roas

How to Calculate ROAS for Your UK Small Business

If you’re running a small business, chances are you’ve heard of the term “ROAS” before. ROAS stands for “return on advertising spend,” and it’s a metric that businesses use to measure the effectiveness of their advertising campaigns. In short, it tells you how much revenue your business generates for every pound you spend on advertising.   In this blog post, we’re going to show you how to calculate ROAS for your business. We’ll also provide some tips on how to increase your ROAS so that you can get the most bang for your buck when it comes to advertising. How to Calculate ROAS

Calculating ROAS is relatively simple; you just need to know two things:

 

your total advertising spend for a given period of time,

and

your total revenue for that same period of time. 


Once you have those two numbers, divide your total revenue by your total advertising spend. The resulting number is your ROAS.


ROAS = Total Revenue / Total Advertising Spend


For example, let’s say that over the course of one month, you spent £1000 on advertising and generated £2500 in revenue. In this case, your ROAS would be 2.5 (2500 divided by 1000 equals 2.5).

This means that for every pound you spent on advertising, you generated £2.50 in revenue.


Tips for Increasing Your ROAS

Now that you know how to calculate ROAS, let’s take a look at some ways you can increase yours.


One of the best ways to do this is by targeting a specific audience with your ads. The more relevant your ads are to your target audience, the more likely they are to click on them—and that means more revenue for your business. 


You can also increase your ROAS by ensuring that your ads are well-designed and eye-catching; if people are interested in what they see, they’re more likely to click through to your website or landing page.


Finally, make sure that the landing page or website that people are taken to after clicking on your ad is optimised for conversions—that is, designed in such a way as to encourage people to make a purchase or take some other desired action.


To sum up, calculating ROAS is important for any UK small business owner who wants to measure the effectiveness of their advertising campaigns. To calculate ROAS, simply divide your total revenue by your total advertising spend. You can increase your ROAS by targeted ads at a relevant audience, well-designed ads, and an optimised landing page or website.


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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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