It’s easy to get lost in “vanity metrics” like clicks, likes, and impressions. They look great on a report, but they don’t pay the bills. If you want to know if your marketing is truly profitable, you need to understand your ROAS (Return on Ad Spend).
Whether you’re a small business owner or a marketing manager in a big corporate, the question at the end of every month is always the same: “Is the money we’re spending on ads actually coming back to us?”
To make your life easier, we’ve built a free ROAS calculator to take the guesswork out of your digital marketing. But before you start punching in numbers, let’s chat about why this metric is an important part of your marketing strategy and how to use it to grow your business.
1. Why do I need to know my Return On Ad Spend?
In simple terms, ROAS tells you how many Rands you earn for every single Rand you spend on ads.
Knowing your ROAS can help you make better decisions. You might spend R5,000 on Facebook and R5,000 on Google. Both might bring in sales, but if Facebook brings in R10,000 and Google brings in R30,000, your ROAS tells you exactly where you are getting the bigger “bang for your buck”.
If you need to justify a bigger marketing budget to management, showing a solid ROAS is the most convincing argument you can make. It’s hard to argue against making money!
2. How to Use ROAS to Improve Your Marketing?
Here are three ways to use your ROAS to level up:
A. Reallocate Your Budget
If you see that your “Summer Sale” campaign has a ROAS of 500% on Meta, while your “Pretty Pants” video is sitting at 200%, you have a clear choice. You can move some of that budget into the high-performing campaign to scale your results immediately.
B. Fine-Tune Your Creative
Sometimes a low ROAS isn’t the fault of the platform, it’s the ad itself. If you’re running three different versions of an ad and one has a significantly higher ROAS, the data is telling you what your customers like. Use those insights to create more of what works.
C. Optimise the “Customer Journey”
If your ROAS is low even though you are getting lots of clicks, it might not be an ad problem at all. It could be your website. Maybe your checkout process is too long, or your landing page isn’t mobile-friendly. A poor ROAS often shines a light onproblems in your sales funnel that you didn’t know existed.
3. How the Brand Candy ROAS Calculator Works
We designed our calculator to be as simple as possible, although some digital marketing knowledge is beneficial. To make it as frictionless as possible, we have preloaded some of the fields with industry benchmarks so you don’t need to hunt for that data yourselves.
The basic formula is:
(Revenue from Ads ÷ Cost of Ads) = ROAS
But our tool goes a bit deeper. Here’s how to use it:
- Choose your platform and your goal: Select whether you’re running Google or Meta ads as well as what type of ad you are running. Currently, we have 4 options available:
- Google Ads for Leads: Select this if you are running Google Search ads and are driving traffic to a form on your website.
- Meta Ads In-Form Leads: Select this option if you are running Meta ads that are using the in-form option. This is the option where the form is in Meta itself and you are not being driven to a website.
- Google Ads for eCommerce: Select this option if you are running Google Shopping Ads.
- Meta Ads for Traffic: Select this option if you are running Facebook or Instagram ads that are driving traffic to a form on your website.
- Select your industry: Choose the industry from the dropdown that most closely aligns with your business.
- Input your monthly ad spend: How much are you spending a month on the platform in question.
- Enter your cost per click: This is the amount it costs every time someone clicks on your ad. If you know this number for your campaign reports you can add it here. If you don’t know it, we have populated this field with an industry specific benchmark.
- Enter your conversion rate: This is the percentage of clicks that turn into leads or make purchases each month. If you don’t have this information, we have populated this field with an industry specific benchmark.
- Lead conversion rate: If you selected a lead generation goal on the first screen, we would like to get an idea of how many of those leads turn into customers. This is often a difficult percentage to know, so just use your best guess.
- Input the value of a lead or a sale: Here, you need to input the rand amount that a lead or a sale is worth to you.
- Check the Benchmarks: Not sure if your number is “good”? We’ve included industry benchmark data based on our experience with South African clients.
What do the ROAS results mean?
Less than 100% – Critical condition
Your campaigns are barely breathing. You’re burning your budget without the return you need. Let us help revive your ads before it’s too late.
100% – 200% – Survival mode
Your campaign results suggest that there may be a problem, unless your objectives are aggressively brand awareness focused. You need some help.
200% – 300% – Limping along
Your ads are working, but you definitely aren’t squeezing everything you can from them. You need an ads audit to determine where there are opportunities for improvement.
300% – 500% – Thriving
Your ads are generating a healthy ROAS for your industry. There still could be missed opportunities, though.
More than 500% – Soaring like an eagle in outer space
Your ads are performing very well. Carry on doing what you’re doing!
Ready to see where you stand?
Don’t let your marketing budget disappear into a black hole. Knowing your numbers is the first step to scaling.
Head over to our ROAS Calculator now and find out exactly how hard your money is working for you. If the numbers aren’t quite where you want them to be, don’t panic. Give us a shout at Brand Candy and we can help!
