Key Performance Indicators are an essential part of measuring the success of marketing campaigns. There are certain KPIs used specifically for UA or Monetization which we will elaborate on in this series of articles. First up: ROAS!
What is ROAS?
An essential KPI for UA Managers is ROAS, which is short for Return On Advertising Spend. It only makes sense that there should be a return on the UA budget a company spends and that is why we calculate what it brings in return. ROAS measurement is used to determine the effectiveness of campaigns and is, therefore, one of the main KPIs UA managers look at.
How to calculate ROAS
We want to know how much revenue your campaign brings in, so how much your users spend on in-app purchases, in return for every dollar spent on advertising. To calculate this, we simply divide the revenue a campaign has brought in by the costs.
So if you spend $1000 on a campaign and it brings in $200 in revenue, you would calculate ROAS: 200/1000*100= 20% ROAS
How to set ROAS goals
ROAS tells you how much revenue came back in after you paid for the install. This is usually evaluated in different time frames. As an example, ROAS D3 (day 3) will tell you how much revenue came back in 3 days after the install.
Keep in mind that in order to calculate this properly, you need to wait for this timeframe (cohort) to be complete. In case you are looking at 3 days of data, you can only properly evaluate D3 ROAS after day six is completed. This is because it could be that a user installed the app on day 3, but then they still have 3 days to make a purchase.
What is considered a good ROAS?
There is no simple answer to this. Defining “good ROAS” depends on company goals and objectives. Also, the type of the app plays a large role in this as for some verticals it is expected that users spend higher amounts of money within the app.
Take for example strategy and social casino apps, users are more likely to make purchases in these apps to continue playing within the game compared to hyper-casual titles.
How to maximize ROAS?
If you are not satisfied with your current ROAS results, the first step would be reviewing your current strategy. Setting more granular targeting options to reach your ideal users in the most effective way will have a positive impact on the overall revenue you generate. That is why it is important to know your audience and to know which gender and age groups are the biggest spenders. Any additional information on your target group, such as which other apps they like to play can help you increase your ROAS as some networks also allow you to target based on this. Keep in mind, the better you know your user, the easier it will be to target them.
Besides that, it is important to find the sweet spot between the price you pay for your campaigns and the effectiveness. Increasing or decreasing the CPI you pay might make all the difference in reaching your ROAS goals.
All-in-all, ROAS is a real winner when it comes to evaluating what drives the best value for every dollar you spend on your UA campaigns and making sure you spend your budget wisely!