Your ad spend is only a fraction of your investment. To figure out the true ROI of your marketing efforts, you need more than a vanity metric.
Measuring campaign performance is an integral part of your marketing optimization. Choosing your campaign KPIs can have a huge impact on how you measure and conceive your failure or success. Though visibility and engagement metrics (impressions, CTR, click rate) will help you gauge your reach, return on investment metrics (CPC, cost per conversion, ROAS, ROMI) will help you objectively determine your campaign's revenue contribution.
But how objectively?
ROAS—return on ad spend—is ad networks' preferred metric. It emphasizes the revenue created by the campaigns you run on their networks, while ignoring much of the spend associated with these campaigns. In that respect ROAS is a vanity metric, which may bode well for the ad networks' goal of enticing you to spend more of your marketing budget with them, but has little to do with the actual success—or lack thereof—of your campaigns.
That's why return on marketing investment (ROMI) is rapidly gaining popularity as a more informative metric that gives you actual insights to fuel your marketing optimization.
What Is Return on Ad Spend?
ROAS is the most basic way to calculate how much you've earned from your marketing campaign.
Here's how you work it out: You take your sales revenue from the campaign period, and you divide it by how much you spent on ads.