As a business owner, you’ve got the finance game down. However, gauging the success of your ad campaigns can be a bit of a puzzle. Luckily, our ROAS calculator is here to simplify it. This powerful tool can elevate your marketing strategy by presenting your ad performance in straightforward numbers.
This valuable information can help you shape your ad campaigns to serve your audience better and convert more quality leads. Continue reading to delve into ad spend and learn how to gauge the returns on your investment.
Click here to get your own editable copy of the calculator
ROAS vs. ROI
There’s often confusion between calculating return on ad spend and return on investment as it relates to advertising. It’s important to clarify what ROAS is before diving into the elements to calculate it. While ROI calculates the profitability of all your digital marketing efforts, ROAS analyzes the total revenue of your digital advertising to give you a clear view of how your ads are performing.
ROAS Breakdown
Before we get to the calculator, it’s important to have a good understanding of the elements that go into it. This groundwork ensures you’re ready to make the most of our ROAS Calculator.
Unpacking Revenue
Revenue is the total income generated from your ad campaigns. For a service-based business, calculating the revenue from ads means tracking the customer journey over a longer period. We recommend finding the average revenue per lead before using our calculator for a more accurate outcome.
You can do this by collecting all the leads you’ve acquired directly from ad campaigns. Once you have this information, take a look at how much revenue your business gained from all of the leads together.
Ex. Last year’s Valentine’s Campaign generated 100 leads. 30 of those leads made a purchase. The total amount spent from all 30 purchases was $100,000.
Now that you have your numbers, divide the Total Revenue [$100,000] by the Total Number of Leads [$100]. This would give you an average of $1,000 in Revenue per Lead. This is the number you want to use when calculating ROAS.
The success of your campaigns may change over time, so it’s important to update these numbers regularly.
Decoding Ad Spend
Ad Spend is the specific budget you allocate to advertise on different platforms. It’s the amount you decide to invest in platforms like Facebook, LinkedIn, or any other channel of choice. This focused budgeting approach ensures you have clear control over where your advertising dollars go.
Understanding Ad Spend is like managing your monthly expenses. You decide how much goes into each platform, similar to budgeting for bills or groceries. This tailored approach is crucial for businesses, allowing them to strategically distribute their ad dollars where they believe they’ll yield the best results.
Despite the intricacies, tracking Ad Spend gives you precise control over your campaign’s financial allocation. This targeted approach empowers you to optimize your advertising strategy, ensuring you get the most impact from your chosen platforms.
Understanding Related Costs
When it comes to managing your ad campaign, understanding the costs involved can be a game-changer. Let’s explore the differences between handling things in-house and partnering with a marketing agency like CyberMark.
In-House Management
Running your ad campaigns in-house demands significant resources and time. A dedicated team is required to develop and oversee ad campaigns full-time. You’ll also need distinct tools to build creatives, test campaigns, and track leads. The time and expenses that come with in-house ad management may not be practical for a small business owner.
Agency Management
You can lower the costs and eliminate the guesswork of ad management by partnering with a digital marketing agency like CyberMark. With years of expertise, we use campaign strategies backed by data. We also have the tools and resources to test out creatives and optimize your campaigns. From templated landing pages that have proven successful to optimal keyword placement, you can elevate your ad campaigns with CyberMark.
ROAS Calculator
Click here to get your own editable copy of the calculator
How to Use the PPC Budget Calculator
This calculator helps you determine the ad budget needed to reach your revenue goals. Follow these simple steps to get accurate results:
🔴 Step 1: Enter Your Information (Red Cells)
Fill in the red cells with your data. New to running ads or aren’t sure what your metrics are? Use these industry benchmarks as a starting point.
- Revenue Goal: The total revenue you aim to generate.
- Average Revenue per Sale: The amount you earn from each sale.
- Average Lifetime Customer Value: The total value a customer brings in their lifetime as your customer.
- Average Cost per Click (CPC): Your typical advertising cost for one click (calculated by dividing total spend by total clicks).
- Average Cost per Lead: The average cost of generating one lead from an ad campaign (calculated by dividing total spend by total leads).
- Conversion Rate (% of Clicks → Leads): The percentage of clicks that convert into leads online.
- Lead-to-Sale Rate (% Leads → Sales): The percentage of leads that your team converts into actual sales.
🟢 Step 2: Review Your Results (Green Cells)
Once you enter your inputs, the calculator will automatically show:
- Required Clicks: The number of clicks needed to reach your sales goal.
- Required Leads: The number of leads needed to meet your revenue target.
- Sales Needed: How many sales you need to hit your goal.
- Average Cost per Acquisition (CPA): The average cost to gain one customer.
- Expected Monthly ROAS: Return on ad spend for the month.
- Expected Lifetime ROAS: The long-term return based on customer lifetime value.
🔵 Step 3: Find Your Recommended Budget (Blue Cell)
Check the blue cell for your total recommended ad budget to meet your revenue goal.
📞 Need Help?
If you want expert support running effective digital ad campaigns, contact CyberMark for a FREE advertising consultation.
