When defining mobile app marketing success we are all familiar with the importance that metrics play. What better way to prove the triumph of your app than by boasting a high return on investment (ROI)? While this is still of course an accepted way to determine the success of your marketing efforts, when it comes specifically to your app install campaigns, Return on ad spend (ROAS) is best.
What is ROAS?
In this digitalized era it goes without saying that competition is fierce. With the growing trend moving towards in-app revenue as the shining beacon of success, for mobile app marketing, ROAS is taking the spotlight.
ROAS (Return On Ad Spend) measures the revenues generated from each dollar spent on app install campaigns. The formula for calculating your mobile app marketing ROAS is as follows:
ROAS = Revenue of Ad / Ad Spend
What is ROI?
Return on investment is a metric that is used in all forms of business to determine how profitable your investments are. ROI looks at all your marketing investments, including additional marketing resources such as design costs, software costs, IT, overhead and internal expenses. It calculates the total cost and determines whether the campaign was profitable. It is calculated as:
(Profit — Marketing Cost) / Marketing Cost
What exactly is the difference between ROAS and ROI?
Yes these two metrics can help to determine the success of your app install campaign, but there is one distinct difference:
Unlike ROI, ROAS does not measure the overall profitability of a marketing investment and does not account for any additional costs. Instead, mobile app marketing ROAS is solely concerned with the ad’s cost and the amount of money earned as a direct result of the ad.
Why ROAS is best as an app install campaign metric
This ability to focus solely on the ad spend and ad revenue is what makes ROAS the foundation for understanding the success of an app install campaign. It cancels out the other factors of your marketing investments such as design costs, software costs and IT, and is purely interested in the cost it took to run the ad and the revenues generated from the ad. This gives a sharp clarity about the performance of your app install campaigns.
While ROI and ROAS both help to prove whether a campaign was successful or not, it boils down to this: ROAS is the one that tells you if your efforts are generating more revenues than the money you are spending on acquiring new users.
Another benefit of ROAS is that it can be used as a performance evaluator. What we mean by this is it can be used to track the performance of marketing partners such as mobile DSPs and Ad Networks, seeing as it calculates the revenue earned from ad spend, the exact job of a mobile DSP and Ad Network.
Now that you know exactly what mobile app marketing ROAS is and why it is the best metric for your app install campaigns, take it to the next level by boosting your ROAS with three effective actions.