What is Blended ROAS?

Blended ROAS (Return on Advertising Spend) is an important metric for an ecommerce business. It helps to measure the success of an advertising campaign by tracking the revenue generated over a specific time horizon from customer spending. The metric is expressed as a ratio of total revenue divided by total ad spend, often reported on a monthly or yearly basis. By understanding the success of advertising across different channels and different types of advertising, businesses can improve their overall marketing strategy.

Formula

Blended ROAS = Total Revenue generated from all Ad Spend/Total Ad Spend

Example

Let’s consider an ecommerce company that generated $50,000 in total revenue from their advertising efforts. During the same period, they spent a total of $10,000 on advertising campaigns.

Using the formula, the calculation for Blended ROAS would be:

Blended ROAS = ($50,000 / $10,000) * 100 = 500%

Therefore, the Blended ROAS for this ecommerce company would be 500%. This indicates that for every dollar spent on advertising, they generated $5 in revenue, resulting in a profitable return on their advertising investment.

Why is Blended ROAS important?

Blended ROAS allows you to measure the effectiveness of all the various advertising channels that a business is involved in, as well as the interactions between them. By understanding the success of advertising campaigns across different channels, it gives an ecommerce business the opportunity to modify their strategy to maximize their return on investment.

Which factors impact Blended ROAS?

Key factors that can influence Blended ROAS include the channel type and focus, the ad type, the pricing strategy, and the targeting methods used.

How can Blended ROAS be improved?

Businesses looking to increase their Blended ROAS should focus on optimizing their marketing channels. This involves testing different ads to maximize click-through rate and measuring the results of each campaign. The goal is to identify the most effective campaigns and focus more resources on them. Additionally, businesses should strive to optimize other aspects of their strategy, such as pricing, website design, and customer journey.

What is Blended ROAS’s relationship with other metrics?

Blended ROAS is typically used in conjunction with other ecommerce metrics to measure the effectiveness of a business’s overall strategy. Commonly used metrics include Gross Merchandise Value, Conversion Rate, and Cost per Acquisition. These metrics can be used in combination with Blended ROAS to paint a comprehensive picture of an ecommerce business’s performance.