Return on Ad Spend (ROAS)

Return on Ad Spend (ROAS) measures how much revenue a campaign generates for every dollar invested in advertising. It is calculated by dividing the revenue attributed to a campaign by the total cost of that campaign. A ROAS of 3.0 means every dollar spent on ads produced three dollars in revenue. This metric is the primary indicator of whether paid acquisition efforts are financially viable.

Measuring ROAS Accurately

Accurate ROAS measurement requires proper attribution, which connects revenue events back to the ad campaign that drove the install. Mobile measurement partners (MMPs) handle this tracking across channels. It is important to use net revenue rather than gross revenue when calculating ROAS, since app store commissions and taxes significantly reduce the actual income received. ROAS can be measured on different time horizons - Day 0 ROAS captures immediate purchases, while Day 7 or Day 30 ROAS provides a fuller picture of user value.

Optimizing ROAS

Improving ROAS involves working on both sides of the equation. On the cost side, refine audience targeting, test creative variations, and pause underperforming campaigns to lower spend. On the revenue side, improve onboarding flows, optimize paywall placement, and increase average purchase value. Setting minimum ROAS thresholds by channel and scaling only campaigns that meet those targets ensures that growth remains profitable.