ROAS is best described as?

• A. The ratio of advertising spend to revenue
• B. The total revenue from ads
• C. The number of conversions per ad spend
• D. Revenue generated per dollar spent on advertising

Answer: (D)

ROAS measures how much revenue you generate for every dollar spent on advertising. It’s calculated by dividing the revenue attributable to ads by the amount spent on those ads, so a ROAS of 4 means you earn $4 for each $1 invested in advertising. This makes ROAS a straightforward way to judge the efficiency of ad spend and to compare different campaigns or channels.

This description is better than the others because it directly links revenue to the advertising cost, rather than flipping the ratio, reporting only total revenue, or focusing on conversions instead of revenue. The inverted ratio would tell you cost per revenue rather than revenue per dollar spent; total revenue from ads ignores how much was spent; and looking at conversions per spend emphasizes quantity of conversions without tying them to revenue.