How is ROAS calculated?

• A. Net profit divided by total impressions
• B. Revenue generated divided by the amount spent on advertising
• C. Impressions divided by ad spend
• D. Cost per thousand impressions

Answer: (B)

ROAS measures how much revenue you generate for every dollar spent on advertising. It is calculated by dividing the revenue generated from the ads by the amount spent on advertising. This ratio focuses on revenue output relative to ad spend, not profit after other costs.

For example, if a campaign yields $8,000 in sales and you spent $2,000 on ads, ROAS would be 4, meaning $4 in revenue for each $1 spent (or 400%). This helps compare campaigns to see which delivers more revenue per advertising dollar.

Note how ROAS differs from ROI: ROI uses profit (revenue minus all costs) divided by costs, while ROAS uses revenue in the numerator and does not subtract other expenses. The other choices describe metrics like impressions or CPM, which don’t directly measure revenue per ad dollar.