Terms of Trade · Edition 1: The PE deck
ROAS. Return on ad spend
Definition
Return on ad spend: revenue attributed to an advertising campaign divided by the cost of that campaign, usually reported by the platform that sold the advertising and usually on revenue the platform has attributed to itself.
Field note
ROAS is the number an agency hides behind when your channel is loss making. It sounds like a business until the product margin, the returns and the fulfilment cost come off the numerator and the platform’s share of the revenue turns out to have been counted twice, once by Google and once by Meta.
Board question
What is the contribution margin on this channel after the ad spend, and does finance recognise the revenue the platform is claiming?
Applied through
Commercial Discipline in the Cat’s Whiskers, money in the right places for the right reasons.
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