Operations

Data Snacks Video — Return On Ad Spend (ROAS)

data-snacks-video-—-return-on-ad-spend-(roas)

Transcript:

What is up, all my eComm champions? We’re back with another Data Snack, and today we’re going to talk about Return on Ad Spend, or as it’s more commonly referred to, ROAS.

So, what is Return on Ad Spend? Return on Ad Spend is the amount of revenue your store made in top-line sales divided by your marketing spend to drive those sales.

For example, let’s talk about a Facebook Return on Ad Spend of 400%. Basically, what that means is that for every one dollar we spent on Facebook marketing, we made $4 back in sales.

Why this really matters is it’s the most commonly referred to benchmark to understand how your marketing channels are performing and whether you’re doing a good job and need to continue (or whether there are areas of improvement, and we need to make adjustments).

You want to be tracking Return on Ad Spend on a weekly and monthly basis to get a really good understanding of how it’s trending and how it’s performing over time, so you can adjust your efforts accordingly. Then, what you want to do is sit down with your finance and your ops teams to track your profit margin over those same time periods, to really understand where are your best-performing ads driving the most profitable sales.

That way, you can continue to drive those sales, invest more in marketing, and start up that virtuous cycle where you’re driving more inn ad sales and growing your business. At the end of the day, that’s what we’re all really here to do.

So, if there are any other notes about Return on Ad Spend or if there’s anything you’d like to add, please drop a note in the comments below. If there’s another area you’d like us to dive deeper into or that I didn’t cover ini this video, shoot me an email at jeremy@daasity.com. 

We’re really looking forward to covering it.

Special thanks to our friends at Daasity for their insights on this topic.

About the author

Steve Hutt

Steve has entrepreneurship in his DNA, starting in the early days of online commerce when he achieved Power Seller status through his eBay store. This propelled him to become a co-founder of VisionPros.com, a contact lens and eyewear retailer. With a successful exit from his startup, he embarked on his next journey into agency work in e-commerce and digital strategy.

Currently, Steve is a Senior Merchant Success Manager at Shopify Plus, where he helps identify, navigate, and accelerate growth in the complex world of commerce.

To maintain his competitive edge, Steve also hosts the eCommerce Fastlane Podcast and Shopify Founder Stories, a top-rated twice-weekly podcast where he interviews Shopify Partners and subject matter experts who share the latest marketing strategy, tactics, platforms, and must-have apps, to help Shopify brands improve efficiencies, grow revenue, profit, and lifetime customer loyalty.

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