Returns on Advertising Spend, ROAS Quick search site map
Return on investment, ROI and returns on advertising spend; ROAS are the two most important criteria you should; No must, take into consideration to run your business successfully.
The easiest thing in any business is to "spend money" but calculating the value of benefits you get in return for your money is infinitely more difficult.
Return on investment; roi is easier to calculate than roas; e.g. a piece of equipment costs £.. it either adds to your company's abilities or saves you time; or adds to your product range both these generate more profits.
ROAS; return on advertising spend is a different matter. Your roas is directly proportional to who sees it; when they see and how they view it.
These are the statistics for advertising in different media throughout Europe.But they only tell half the story. To calculate your roas; return on advertising spend you need to factor in how must each sale cost you to make.
You start by calculating how far (realistically) you expect your customers to be drawn from.
This of course depends on what you sell and where and who your competition is.
If you sell your products Nation wide you must consider the top performer for it is the most cost effective advertising to target vast areas.
But if you sell fish and chips; Don't spend any money on advertising.
This company calculated their best return on advertising spend; roas would be to advertise to high volume users of ink cartridges within a targeted area close to their shop.They calculated that potential customer would not travel great distances to spend money with them; since the cost of their product was not huge and their competition was fierce.
This Beermat is advertising to 21,000 students in Swansea University; that use and spend money on an average of 9 ink cartridges each and every term.
This Beermat is in each of the students bars and their night club.
Calculating their return on advertising spend "roas" amounted to 1,000's of percent.
An excellent example of how to calculate both return on investment, ROI and calculating return on advertising spend ROASRotorflight has large investment in both the costs of the helicopters and the fixed costs of operating their services.
They need an income to service these substantial overheads. So they are looking for a return on investment ROI
In order to generate this income they must tell people; potential clients about their company and what it offers.
Obviously they need to advertise; but where? Rotorflight must look at the best advertising for the maximum return on advertising spend. ROAS
The range of these flying machines is such that they are able to operate over vast areas; but Rotorflight are looking to promote Helicopter Training and Trial Flights.
So calculating that they needed to tell people in specific areas within reasonable travelling distances of Bristol International Airport. They made their choice.
To get the best roas return on their advertising spend this company chose to target their advertising budget spend in Golf and Country clubs on the clubs advertising Beermats.
Calculating that although many people would like to learn to fly a helicopter potential clients need to have1, Commitment 2, Time (learning to fly is very time consuming) 3, Disposable income (The money; learning to fly a helicopter is expensive).
They of course (no pun intended) made the perfect choice; for by and large Golfers have all the right credentials.
The return on their advertising spend impressed them enough to expand their operation to other airports and to direct their advertising spend to even more Golf Clubs.