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To calculate return on ad spend, enter the total advertising spend below and the total amount of revenue that resulted from the ad spend.
Digital Marketing Term Glossary
Spend: Spend is the net advertising cost. This does not include management fees, creative or anything else - purely the advertising hard cost.
Impressions: Impressions are the amount of times ads appeared, or were shown, in the given channel. Essentially how many ads were served by the advertising spend.
Cost-per-thousand Impressions (CPM): CPM is how much it costs in net advertising spend to purchase 1,000 impressions. ((Spend / Impressions)*1000) = CPM
Click-through Rate (CTR): CTR is the rate at which impressions result in a viewer of the ad clicking on it. If 100 ads are shown and 1 person clicks, that is a 1% CTR. Clicks / Impressions = CTR
Clicks: Clicks are the amount of people who clicked on, or took an action on an ad. The click metric is also commonly associated with the number of website visitors.
Cost-per-click (CPC): CPC is the average amount paid in advertising spend per click on the ad. Spend / Clicks = CPC
Conversions: Conversions - which could be sales, leads, downloads, email opt-ins - is the total volume of conversion actions attributed to the ad spend.
Conversion Rate: Conversion rate is the rate at which a click turns into a conversion action such as a lead form submission, ebook download, email opt-in, sale, etc. Conversions / Clicks = Conversion Rate
Cost-per-conversion: Cost-per-conversion - often referred to as cost-per-acquisition (CPA) - is the average amount of advertising spend invested per resulting conversion action. Spend / Conversions = Cost-Per-Conversion
Return on Ad Spend (ROAS): ROAS is a measurement of how much revenue is returned per dollar spent. This can be expressed as a percentage, or a dollar amount. Revenue / Spend = ROAS
Markup: Markup is the difference in price between what a business pays for a product (cost) and what a buyer pays for that same product. Markup is based on the cost of goods paid by the business. Markup is the net revenue amount the business will keep.
Margin: Margin is the difference in price between what a business pays for a product (cost) and what a buyer pays for that same product. Margin is the gross revenue percentage the business keeps.