Return On Ad Spend

Mapendo Team
March 31, 2022

In app install campaigns it is essential to keep an eye on your efforts and spending in order to see if your campaigns are successful and if your users are high-quality users. In this context, keeping track of the ROAS is extremely helpful.


What is ROAS (Return on Ad Spend)?

Return on Ad Spend (ROAS) measures how much revenue is generated from a specific ad or campaign; it allows to calculate the revenues generated from each dollar spent on app install campaigns and to calculate the performance of digital advertising spend.

It is a function of two factors: CPI (Cost per Install) and ARPU (Average Revenue per User).

First, revenue, Customer Acquisition Cost (CAC) and KPIs need to be defined. Then, there are many ways to drive ROAS in user acquisition campaigns, such as the use of A.I. and machine learning algorithms.

In addition, acquiring high-quality users, creating engaging and targeted ads and selecting different geos are key tips advertisers can follow if they want to boost the value of the ROAS.


So, one may be wondering: what’s the difference between ROAS and ROI?

ROAS refers to the return on ad spend, while ROI refers to the return on investment.

ROI is the Return on Investment and when you calculate it, the intent is to measure the return on a particular investment against the cost of that investment. It's basically calculating your net profit.

In the context of app install campaign and mobile marketing both ROI and ROAS are important metrics and for that reason both metrics should be used. ROI is more useful to see the long-term profitability and therefore to measure the overall profits (in fact, it tends to consider the Lifetime Value(LTV) of the users rather than the ARPU), while ROAS is more useful in the short term, to optimize a certain campaign and understand if it is contributing to the overall profits.


Why is ROAS (Return on Ad Spend) important?

Among all of the metrics that allows you to measure the performance of your app install campaign, the ROAS actually tells you if your efforts are generating more revenues than the money you are spending on acquiring new users. ROAS can be used as a measure of the success of an app install campaign: all app install campaigns that are ROAS positive can be considered successful. 

So, app marketers can use ROAS to measure their user acquisition (UA) efforts and highlight which campaigns delivered high-quality users, meaning users that install an app and carry out several in-app events generating in-app revenue.

ROAS is most useful in mobile marketing when it comes to app campaign optimization and when you need to monitor multiple campaigns, channels, and ad platforms, and you need to monitor them in order to understand which ones are the most effective and therefore which ones should continue to receive budget allocation. Through the optimization of app install campaigns you can improve your ROAS . 


What you need to know about ROAS (Return on Ad Spend)

  • Good ROAS is positive ROAS and achieving a positive ROAS in a campaign can take months;
  • ROAS is one of the most important metrics for marketers in app install campaigns;
  • ROAS is crucial for app campaign optimization;
  • When it comes to app install campaign, more engaging ads such as playable ads or for example rewarded video ads can lead to better ROAS, as users acquired through these ads have had the opportunity to try the app before installing it, and thus are more likely to stay for the long term, doing post-install events such as in-app purchases, meaning they are more likely to become high-quality users;
  • Calculating the ROAS is fundamental to monitor in-app revenue.