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ROAS (Return on Ad Spend) = Revenue OR Purchase Conversion Value / Ad Spend
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For the sake of simplicity, let’s assume the numbers you are seeing on ad manager are exact match to the sales numbers in the backend (which is less likely. More on that later).
You were doing:
$20/day Ad Spend X 5.84 ROAS = $116.8 Revenue/day
Then you increased budget & did:
$100/day Ad Spend X 1.61 ROAS = $161 Revenue/day
Let me tell you something very very important.
Obsessing over higher ROAS, countless brands got themselves stuck in a perpetual low revenue cycle, even the ones that had great product-market fit, great TAM (Total Addressable Market).
I have seen this again & again for the past 10+ years.
An eCommerce business owner has just started or had low or no sales for a while. However, those who purchased their products loved them, recommended them to others, and some even left glowing reviews.
They tried running ads to attract more customers, either by themselves or by hiring freelancers and agencies.
But they stopped because they didn't achieve a 2+ ROAS, their results were inconsistent, or they were hesitant to spend more on ads.
They then explored other avenues: