Return On Ad Spend: Are Your Ad Dollars Working for You?

There is more of a difference between ROA and ROI than a letter. Return on investment (ROI) measures the profit generated after both the cost of investment, and related expenses are considered. Return on ad spend ( ROA) considers the cost for an advertising campaign correlated to the profit generated by it. ROA is a good determiner for assessing how much profit was gained per dollar spent on an ad. ROI can evaluate if the overall investment was beneficial. When running your own business, regardless of size, it’s helpful to understand these concepts even if you aren’t the person spearheading marketing campaigns. Coupling these two metrics can provide insight into which campaigns are successful or which are not profitable. To calculate the ROA of a campaign, you will need to know the profit produced and the advertising dollars spent. 

Return on ad spend formula

Return on Ad Spend In Action

Let’s say that you’re a local mental health therapist and started offering online sessions to your current patients to accommodate the social distancing regulation during the Covid-19 pandemic. 

You noticed the success of the online format and wanted to begin offering it to new patients. 

Considering the increased use of social networking sites during this time, you decide that running a paid campaign on Facebook and Instagram is the best option. While programming your ad, a UTM google analytics code and a Facebook Pixel code were added to track all traffic and conversion generated by it. You spent $1000.00, and the ad brought in $850.00 in profit from the 10 patients booked directly from the ad’s landing page. The campaign generated a ROA of 85% and is seen as profitable compared to the money spent to run it.  

Next Steps

If you’re considering running digital ads for your local health practice, make sure to keep track of the booked appointments each campaign brings in. To take it a step further, consider calculating the ROI of campaigns to determine their overall benefit to your business. If you haven’t yet, read my last post on choosing the right social media channels for your business