Return on Advertising Spend (ROAS) is the amount of revenue a company receives for every dollar spent on an advertising source. This is a gauge of the effectiveness of online advertising campaigns. The higher your return, the more effective the ad source.
To calculate return on ad spend, use this formula:
ROAS = (Revenue derived from ad source)/(Cost of ad source)
If you spent $1,000 on Shopping Campaigns in one month, and during the same month these campaigns generated a revenue of $5,000, then your return would be:
$5000/$1000 = 5:1 or 500%
A return on advertising spend of 5:1 indicates that for every dollar spent on Shopping Campaigns, you get $5 in revenue.