What is the ROAS for this campaign?

You have just gotten the results from a conversion campaign you ran for a membership site for 2 weeks:

There were 9 new customers acquired through the campaign.

Customers usually pay 6 months on average.

The monthly membership fee is $15.

The total amount you spent on the campaign was $400.

What is the ROAS for this campaign? Choose only ONE best answer.
A . $102.50
B . $265
C . -$265
D . $410

View Answer

Answer: D

Explanation:

Return on Ad Spend (ROAS) measures gross revenue generated directly for every dollar spent on the advertising campaign:

ROAS = Revenue From Ad Campaign / Cost Of The Ad Campaign

A more accurate way to calculate ROAS when you have recurring revenue is with the following formula:

ROAS = (# of new customers acquired from Campaign x LTV of a New Customer) C Cost of Ad Campaign

In this case, you would need the following info:

# of new customer => 9

LTV of new customers => 6 * $15 = $90

Cost of Ad Campaign => $400

ROAS = 9 * $90 – $400 = $410