In Prospect Budget Training, what is ROAS and how is it calculated?

• A. Return on Advertising Spend; ROAS = revenue attributed to advertising ÷ advertising spend.
• B. Revenue per ad click.
• C. Profit margin per customer.
• D. Customer acquisition per ad spend.

Answer: (A)

ROAS measures how effectively advertising dollars translate into revenue. It’s calculated by taking the revenue that can be attributed to the ads and dividing it by the amount spent on those ads. The result is a multiplier (for example, 3x or 4x), showing how many dollars of revenue you earn per dollar spent on advertising.

Key idea: ROAS uses revenue tied to ad activity, not overall profit or other costs. This is why it’s different from profit margins (which consider costs beyond ad spend) and from metrics like revenue per ad click (which looks at revenue per single click rather than total campaign revenue). It’s also distinct from customer acquisition metrics that focus on the number of customers gained per spend; ROAS focuses on revenue return relative to ad spend.