UNDERSTANDING

ROAS IN
MARKETING
 1 What is ROAS?

PRESENTATION
PLAN 2 Why ROAS Matters

3 Types of ROAS

4 Interpreting ROAS Results

 WHAT IS ROAS

ROAS, which stands for Return on

Advertising Spend, is a critical metric
in the field of marketing. It serves as a
quantitative measure to evaluate the
effectiveness of advertising efforts.
Specifically, ROAS calculates the
revenue generated for every dollar
spent on advertising.
 This metric is derived by dividing the total revenue
generated from a particular advertising campaign by
the corresponding cost of that campaign. In essence,
a ROAS of 1 signifies that the revenue matches the
advertising cost, while a ROAS greater than 1
indicates a positive return, signifying that the
advertising investment has yielded more revenue
than the amount spent. ROAS is an invaluable tool for
marketers, providing insights into the profitability
and efficiency of their advertising endeavors, allowing
them to optimize strategies for maximum impact.
WHY ROAS MATTERS

The significance of ROAS in marketing

strategy cannot be overstated, as it plays a
pivotal role in guiding decisions, maximizing
returns, and optimizing advertising
campaigns. By understanding the
relationship between advertising costs and
generated revenue, businesses gain valuable
insights that influence their overall
marketing approach.
 ROI RESOURCE BUDGET
ASSESSMENT: ALLOCATION: OPTIMIZATION

ROAS serves as a key With a clear understanding ROAS guides budget

indicator of the return on of ROAS, businesses can optimization by
investment (ROI) for allocate their resources highlighting which
advertising efforts. It helps more effectively. By advertising channels or
marketers evaluate the identifying high-ROAS campaigns are most
profitability of their campaigns, marketers can efficient in driving revenue.
campaigns and assess allocate more budget Marketers can adjust
whether the resources towards those strategies budgets based on the
allocated to advertising are that deliver the best performance of different
yielding positive returns. returns, ultimately channels, ensuring that
maximizing the impact of resources are allocated
their advertising where they are most likely
investments. to generate positive
returns.
 STRATEGIC RISK CONTINUOUS
DECISION-MAKING MITIGATION IMPROVEMENT:

Armed with ROAS data, ROAS also serves as a risk The iterative nature of
marketers can make mitigation tool. By marketing requires
informed strategic continuously monitoring continuous improvement.
decisions. Whether it's and analyzing the metric, ROAS facilitates a feedback
adjusting ad creatives, businesses can quickly loop where marketers can
refining targeting identify underperforming analyze results, make data-
parameters, or exploring campaigns and make driven adjustments, and
new channels, ROAS acts timely adjustments, refine their strategies over
as a compass, guiding minimizing the risk of time. This adaptability is
marketers towards wasting resources on crucial in the dynamic
strategies that are more ineffective advertising. landscape of digital
likely to yield profitable marketing.
outcomes.
TYPES OF
ROAS
GROSS ROAS (RETURN ON ADVERTISING SPEND)

Calculation: Gross ROAS is calculated by dividing the

total revenue generated from a specific advertising
campaign by the cost of that campaign. The formula
is:

Significance: Gross ROAS provides a straightforward

measure of how efficiently the advertising budget is
translating into revenue. It reflects the overall impact
of the campaign without factoring in additional costs.
GROSS ROAS (RETURN ON ADVERTISING SPEND)

Calculation: Net ROAS takes into account additional

costs such as the cost of goods sold (COGS) or variable
expenses directly related to delivering the advertised
product or service. The formula is:

Significance: Net ROAS offers a more refined view of

profitability by subtracting variable costs. This is
particularly useful for businesses with significant
variable costs associated with each sale.
Interpreting
ROAS Results
1. ROAS = 1:
Interpretation: A ROAS of 1 means that the revenue
generated equals the advertising cost.
Implication: The campaign is breaking even; it's not
yielding additional profit, but it's also not operating at a
loss.
2. ROAS > 1:
Interpretation: A ROAS greater than 1 indicates a positive
return on advertising spend.
Implication: The campaign is profitable. The higher the
ROAS, the more profitable the campaign, with values
significantly above 1 suggesting efficient use of advertising
budget.
3. ROAS < 1:
Interpretation: A ROAS less than 1 suggests that the
revenue generated is less than the advertising cost.
Implication: The campaign is not profitable, and
adjustments may be needed. It's important to reassess
targeting, messaging, or channels to improve efficiency.
 IN THE GAME DEVELOPMENT INDUSTRY, MEASURING THE
SUCCESS OF ADVERTISING CAMPAIGNS THROUGH ROAS CAN
VARY BASED ON THE TYPE OF GAME, TARGET AUDIENCE, AND
THE MONETIZATION MODEL. UNLIKE SOME INDUSTRIES WITH
MORE STANDARDIZED BENCHMARKS, GAME DEVELOPMENT
ROAS BENCHMARKS TEND TO BE MORE FLEXIBLE.
 FREE-TO-PLAY MOBILE PREMIUM GAMES
GAMES

ROAS Benchmark: For free-to-play ROAS Benchmark: For premium

mobile games with in-app games that users purchase upfront,
purchases, a ROAS of 20% to 50% or aiming for a ROAS of 100% or
higher may be considered a solid higher is generally a good goal. This
benchmark. This indicates that for means that the revenue from
every dollar spent on user game sales exceeds the advertising
acquisition, the game is generating costs.
a return through in-app purchases.
 SUBSCRIPTION-BASED
GAMES
ROAS Benchmark: For games with
subscription-based models, the
focus may not be on immediate
returns but rather on long-term
customer value. Tracking user
retention and lifetime value (LTV)
becomes more crucial than a
specific ROAS benchmark.
INDIE GAMES
ROAS Benchmark: Indie games or
niche genres might have lower
ROAS benchmarks. Success can be
measured not just by direct
revenue from user acquisition but
also by building a dedicated player
base over time.
THANK
YOU! Have a
great day
ahead.