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
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