ROAS is an essential measurement of performance marketing. It is a KPI (key performance indicator) that assesses the performance of paid user acquisition for mobile applications. It measures how the paid acquisitions perform in terms of generating revenue after installing the mobile apps against the spent on marketing campaigns.
If a company wants to know how well it spends in marketing budgets for growing mobile apps business, it should track the ROAS. But before we get to that, let us first understand what ROAS is and its importance.
What is ROAS?
ROAS stands for Return on ad spend. It is crucial to gauge how much revenue your ads generate per dollar spent. Essentially, it is the cost of advertising against the profits it brings for a specific promotion, measuring and determining the success of strategic advertising on mobile apps.
Every business wants to know how much they earn from their advertising ventures- if it is helpful to spend money on promotions and other campaigns on mobile apps. It is based on the ROI (return on investment principle) and tracks whether a promotion can bring the desired numbers. Businesses can see how much profit they achieve from their advertisements.
ROAS is measurable both ways. A business can gauge the entire marketing strategy or track the performance of a targeted promotion. You can see the big picture or treat each campaign as a separate entity for granular tracking.
What's a Good ROAS?
Every smart business understands the importance of ROAS and how detrimental it is to take your business to the next level. It would be best to track your ROAS closely, as it shows how well your mobile marketing campaigns are performing. It has many advantages, some of which are-
- It measures the effectiveness of the money you spend on advertisements. It is essential to know if your spending is yielding fruitful results. If the ROAS is low, you are not generating enough revenue to justify the investment. However, if it is on the higher side, your advertisement campaign is bringing in a good return on the input.
- Businesses can track multiple campaigns across mobile apps. ROAS is extremely useful when simultaneously tracking multiple campaigns, ad platforms, and channels. You can see which of your campaigns generate enough revenue to continue and which to pull back. It helps you allocate your budget for better returns.
- It helps to target the correct demographic for better returns through advertising. Every business runs advertisements for better profits. They also expect returns on the money they invest. However, the money spent is a total waste if the campaigns are not targeted to the right demographics. When you track your ROAS, you can optimize your targets and streamline your user acquisition sources to hit your desired numbers.
- You can check the performance of your mobile marketing strategies. ROAS (Return on ad spend) is one of the many KPIs that provide insight into a campaign's success. Combing ROAS with other PPC metrics like cost per acquisition (CPA), cost per click (CPC), and cost per lead (CLP) to paint a complete picture of your advertisements and optimize them accordingly to hit the targets.
- ROAS provides a comprehensive view of an advertising strategy. Businesses can view their mobile marketing strategies as a whole or in a granular form. All the data is available in a single dashboard so that you can get a bird's eye view and holistic insight into the performance on all levels.
ROAS is applicable at all levels with desired levels of granularity. You should calculate ROAS on overall spending and then by each campaign across each channel and platform. This way, you can determine your mobile marketing strategies and the campaigns that drive the most profit. Hence, you can decide which campaign performs well and needs to continue and which must be discontinued.
How to Calculate ROAS?
It is straightforward to calculate ROAS. Essentially, it is the total revenue divided by your entire ad spend. For mobile in-app purchases and app purchases by users acquired through the campaign, triangulate them in the total cost of the campaign.
ROAS = (revenue from ads/cost of ads) x 100%
For instance, you generate $2000 in revenue from a campaign with an investment of $500. With this formula, the ROAS comes out to be 4, which is an excellent result.
However, it can be challenging to calculate ROAS when you have many parameters to determine the cost of an ad. There are some factors that you need to decide to calculate the cost. Firstly, you decide if you want to factor in the amount you spent on a platform in dollars or if you also want to consider the bundle cost. Then there are extra expenditures like vendor costs. It is the fee or commission they charge to run your campaigns. The person who sets and manages the campaign is also liable for compensation, whether he is in-house or you outsource him.
How to Track ROAS for Mobile Subscription Apps?
So far, we have learned how crucial it is to track your ROAS. But running campaigns simultaneously makes it challenging to follow every campaign across all platforms. It can make evaluating ROAS challenging.
We suggest you use an analytical tool like appflow.ai. It helps subscription apps to track the ‘real’ revenue they generate from user acquisition. Companies can track how many conversions they get from paid marketing campaigns. With this brilliant analytical tool, companies can see how many installs convert into trials and, ultimately, subscriptions.
The ultimate goal of businesses in the mobile app industry is to acquire users. They need to keep track of users they receive through paid channels. Appflow.ai gives you the lifetime value of these acquisitions to evaluate your ROAS accurately. With all the data presented to you, you can make informed decisions.
Appflow.ai tracks the ROAS and all the other subscription key metrics and KPI for free. You can create a free account (no credit card required) and begin tracking ROAS for your subscription apps.
ROAS-tracked-by-appflow.ai
Run Successful Mobile Marketing with ROAS
ROAS is an essential metric to get revenue on your advertisement expenditure. But getting results is not the only aim here. Tracking campaign performance gives you a real insight into what works for your brand and is not. It lets you understand how many paying users you acquire from your marketing campaigns. You can see which campaign helped you achieve your acquisition goals and how efficiently. This data can be used for future endeavors.
What is ROAS for Mobile Apps？
