The revenue attributed to advertising divided by the amount spent on that advertising.
A campaign efficiency metric used to compare financial return with media cost.
Short and sweet:
The revenue attributed to advertising divided by the amount spent on that advertising.
A campaign efficiency metric used to compare financial return with media cost.
See also: ROAS, Return on Investment, Attribution
Return on ad spend zeroes in specifically on advertising, deliberately excluding other marketing costs like content production, tools, or staff salaries that a broader ROI calculation would normally include. This narrower scope makes it especially useful for real-time decisions inside an ad platform, like deciding whether to increase budget on a specific campaign that’s already running. Because it ignores overhead costs, a campaign can show a strong ratio here while the business is still not truly profitable once every other expense is factored in.
A jewelry brand running Instagram ads during the holidays might track return on ad spend daily, pausing any campaign that dips below a 3-to-1 ratio between revenue and cost.
Comparing this figure across channels can reveal that Google Search outperforms Facebook for a business like a mattress retailer, even if Facebook drives more total clicks.
Marketing teams often report this number to executives in board meetings, since it translates campaign performance into a simple financial figure that’s easy for non-marketers to understand.
