What is the ROAS for this campaign so far?

After 6 weeks of running campaigns, you’ve spent exactly $11,958 total. You go to your data and realize that you’ve sold 64 smartwatches.

The mobile app works on a freemium model, where you can pay $0.99 a month for increased functionalities. From the 64 people that bought the smartwatch, 50% are paying the monthly fee.

On average people pay the monthly fee for 12 months.

What is the ROAS for this campaign so far? Choose only ONE best answer.
A . $3,042
B . $3,500
C . $4,042
D . $4,422.16

View Answer

Answer: D

Explanation:

ROAS = (# of new customers acquired from Campaign x Long-term Value of a New Customer) – Cost of Ad Campaign

✑ # of new customers => 64

Long Term Value for new Customers => is comprised of two parts:

✑ #1 Sales of the consumer watch: 64 * 250 = $16,000

✑ #2 Sales from subscriptions: 64 customers * $0.99 monthly fee * 12 months * 50% = $380.16

Total LTV = $16,380.16

Cost of Ad Campaign = $11,958

ROAS = $16,380.16 – $11,958 = $4,422.16