A Small ROAS Calculator, and Why I Built It

Posted by Sean on June 21, 2016

Here’s a small thing I’ve put together: a ROAS calculator. You can find it at /roas-calculator/, and this is the two-minute explanation of why it exists.

ROAS, return on ad spend, is revenue divided by cost. It’s one of those numbers everyone uses and nobody quite agrees on. I’ve sat in more than one meeting where someone announces a campaign hit “a 4:1” as if that settles something, and nobody in the room can actually say whether 4:1 is good, bad or beside the point for what we’re trying to do. The number gets thrown around with no reference behind it, and the discussion goes in circles.

The calculator doesn’t settle that argument. What it does is clear the arithmetic out of the way so you can have the argument properly. You put in what you spent and what came back, and it gives you the ROAS. You set a target, and it shows the revenue you’d need to hit it, or the spend you can afford at your current return. Because it’s the same sum for every channel, you can line them up next to each other on a like-for-like basis instead of comparing numbers that were each worked out a slightly different way.

What it does:

  • Works out ROAS from spend and revenue, so nobody’s doing it in their head
  • You give it a target and it tells you what “good” actually looks like in pounds
  • It runs the same sum for every channel, which is the only way lining them up means anything

I’ve kept it deliberately basic. It won’t tell you what your target ROAS ought to be, which is a conversation about margins for another day, and it isn’t trying to stand in for a proper analytics setup. It just does the sum cleanly, so the argument’s about whether the campaign was any good, not about the maths behind it.

Have a go with it, and tell me if it’s useful or if there’s something obvious it should do that it doesn’t.