"How much should I spend on my digital marketing campaigns?"
It’s a question on the minds of many decision-makers for e-commerce brands. When putting together a marketing strategy, it is important to crunch the numbers and know what your targets are and what to expect.
Make sure your campaign succeeds by calculating some key metrics – below you’ll find descriptions of key metrics that e-commerce decision makers must observe and monitor throughout campaigns. In addition to these metrics, use the Advertising ROAS Calculator in this article to help you budget an appropriate ad spend and forecast the results you might achieve.
Return on Ad Spend (ROAS)
Return on ad spend (ROAS) is used to determine if you’re generating enough revenue to justify the expense of your digital marketing activities.
ROAS is widely considered the most important metric of campaign success for e-commerce brands as it is easy to understand and determines whether a campaign is profitable (or not).
Return on ad spend is calculated as follows:
ROAS = Revenue attributable to ads / Cost of ads
Break-Even Return on Ad Spend (ROAS)
Break-Even ROAS = 1 / Average Profit Margin %
Use the tool below to calculate your break-even ROAS
Break-Even ROAS Calculator
Calculating Your Campaign Metrics
Once you have a sense of your break-even ROAS, you can start to plan for your campaign success by estimating key metrics of your campaign.
Advertising ROAS Calculator
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Other Key Metrics to Measure
ROAS is a key metric for judging the success of a campaign, however, other key metrics are often overlooked or ignored in its favour. ROAS should be used alongside the following crucial metrics to paint a clear picture of the long-term trajectory of a business’ marketing profitability: