What is ROAS and why should you track it?
Return on Ad Spend (ROAS) is a metric that gauges how effectively your ad campaigns are performing. It simply divides the amount of revenue your ads create by the amount of money it cost you to traffic them. Using this metric, you can see how your business is earning compared to the amount that you spend on ads. Plus, company leaders want to know exactly how much revenue marketing and advertising campaigns generate.
Tracking ROAS is necessary to ensure you’re investing in the correct campaigns and cutting back on ads that aren’t as successful. You can often combine this data with other reports like Customer Lifetime Value to have a full picture of how your business is performing.
Why tracking ROAS is complex
Data lives across multiple sources
You’re likely not just tracking one ad source at a time. Even if you are, you will need to compare that information to the purchases that your customers are making to have a full picture of your ROAS. Pulling in and combining that data can be a time consuming and difficult process as this information lives across multiple channels and in multiple programs.
Your data needs to be collected on a regular basis
When making the best decisions for your business, you’ll need to ensure that you’re looking at the most recent data when reviewing ROAS. As you get new eyes on your ads and new customers filling their carts, you’ll want to be able to easily and quickly pull the most up to date information.
Changes to campaigns are difficult to track
Any additional sources that are added in to your reports can create more work across different teams to pull in that information. If your team decides to set up additional Facebook Ads, you’ll obviously want to be able to quickly track how they are performing without waiting on help from additional teams to pull in that information.
Parabola makes tracking ROAS easy!
When calculating return on ad spend, you may often find yourself spinning up multiple reports in different tools, only to have to find a way to bring them together again to compare the data. Parabola lets you:
- Work on these reports all in one place. You can easily pull in your data from multiple sources to begin building out your report.
- Set your report to run on a schedule. You can schedule your report to run on a daily or hourly schedule so you can easily track trends across your ROAS.
- Easily integrate your ROAS metrics into other reports. With our Parabola Tables feature, you can easily pull in data from other reports that you’ve run in Parabola.
Below, we’re going to walk through our DTC Essential: First-Time Customer Sales vs. Ad Spend recipe to show one way that you can do this in Parabola.
1. Pull in your first-time customer order information:
In the screenshot below, we’re pulling in order information from Shopify and identifying first time customers using a Filter rows step to keep customers with only 1 order count. From there, we’re using Sum by groups and Insert math column steps to calculate the average order value of these customers.
2. Pull in your Ad Spend:
Next we pull in the amount that is being spent on ads from both Facebook Ads and Google Ads (via the Google Analytics step). We then use Edit columns steps to ensure we’re only working with the data that we want.
3. Combine your data and format for a daily report:
Finally, we combine that data using Combine tables steps. We’ll then use an Insert math column steps to calculate our total ad spend as well as our customer acquisition cost. Then we will clean up that data and format it for our daily report that will be sent to Parabola Tables. This report can then be viewed by the rest of your team in Tables and also pulled into additional Flows to be used with other reports.
In just a handful of steps, Parabola took the complex and repetitive ROAS calculation and made it easy and automatic. You can try it for yourself - sign up at parabola.io and get a FREE 14-day trial. Or email us at email@example.com and we can help you get started!