How to Do ROAS Calculation to Optimise Your Ad Spend

In the ever-evolving landscape of digital marketing, measuring performance is critical to success. One of the most precise ways to assess campaign performance is through ROAS Calculation—Return on Ad Spend. This metric offers a clear picture of how effectively your advertising dollars are working.

Whether you’re running Google Ads, Meta campaigns, or influencer marketing, ROAS Calculation is your guide to informed decision-making. At DigiSwarm, we help businesses decode complex data into clear, actionable strategies.

What is ROAS Calculation?

ROAS Calculation measures the revenue earned for every rupee spent on advertising. It’s calculated using a simple formula:

ROAS = Revenue Generated from Ads / Cost of Advertising

For example, if you spent ₹10,000 on ads and earned ₹50,000 in return, your ROAS is 5x. This means for every ₹1 spent, you earn ₹5 back.

Why ROAS Calculation Matters

Without understanding your ROAS Calculation, you’re essentially navigating campaigns in the dark. It helps you:

• Identify high-performing campaigns

• Cut down on wasteful ad spend

• Optimize ad creatives and targeting

• Justify marketing budgets to stakeholders

Factors Affecting ROAS Calculation

Several variables can influence your ROAS Calculation:

• Ad Creative: High-quality visuals and copy drive better engagement.

• Targeting: Precision targeting leads to higher conversion rates.

• Landing Page Experience: A seamless experience boosts your chances of conversion.

• Product Pricing: Expensive products may yield a higher ROAS if conversions happen.

Tools for Accurate ROAS Calculation

There are various tools available to aid your ROAS Calculation, including:

• Google Ads Dashboard

• Facebook Business Manager

• Analytics Platforms (e.g., Google Analytics, HubSpot)

• Custom spreadsheets with performance data

These platforms not only calculate ROAS but also break down where your spend is most effective.

Setting Benchmarks for ROAS Calculation

There’s no universal “good” ROAS—it depends on your industry and goals. However, a ROAS of 4:1 or higher is often seen as profitable. By setting a benchmark, you can measure future campaigns more effectively.

Common Mistakes in ROAS Calculation

Even seasoned marketers sometimes misinterpret or miscalculate ROAS. Here are a few pitfalls to watch out for:

• Not Including All Costs: Only counting ad spend without considering other campaign-related costs like creative production or agency fees can inflate ROAS.

• Short-Term Analysis: Evaluating ROAS too early can be misleading, especially for campaigns with a longer sales funnel or high-ticket items.

• Ignoring Attribution Models: ROAS can vary based on the attribution model used (first-click, last-click, linear, etc.). Ensure consistency in your analysis.

ROAS vs ROI: What’s the Difference?

While ROAS Calculation focuses strictly on the return from advertising spend, ROI (Return on Investment) considers the entire business cost structure. Here’s how they differ:

Use ROAS for tactical ad performance and ROI for strategic business health.

ROAS Calculation in E-Commerce vs. Service-Based Businesses

E-commerce businesses often see immediate revenue after a campaign, making it straightforward. But in service-based industries, the results may manifest over weeks or months due to longer conversion cycles.

To counter this:

• Use Lead Value Estimation for service sectors.

• Combine Lifetime Value (LTV) with ROAS for more accuracy.

Case Study: How DigiSwarm Improved a Client’s ROAS by 200%

A mid-sized apparel brand partnered with DigiSwarm to optimise their ad performance. Through:

• Laser-focused audience segmentation

• Creatives tailored to user behaviour

• Conversion-friendly landing pages

We scaled their ROAS from 2.5x to 7.5x within 60 days—proving how strategic can dramatically improve outcomes.

Improving Your ROAS Calculation

To enhance your :

• A/B test creatives and copy

• Improve the user journey and checkout process

• Reallocate budget to top-performing platforms

• Use remarketing campaigns

Consistently reviewing and adjusting your strategies will result in a more profitable outcome.

Conclusion

Mastering ROAS Calculation is essential for digital marketing success. It helps allocate budget wisely, maximise returns, and drive sustainable growth. As a trusted partner, DigiSwarm empowers you with data-driven insights and performance analytics. Count on the best digital marketing agency to turn your ad spend into measurable success.