ROAS Statistics 2023
While ROI is the best measure of success for digital marketing campaigns, ROAS is a close second. ROAS interprets a marketing or advertising campaign’s return in the context of a single dollar, e.g. “For every dollar you spend, you make $1.25 back.” The ease of understanding that ROAS offers is what makes it popular among CMOs.
Our firm collected ROAS data from 52 clients between 2018 and 2022. In this article, we share statistics on ROAS, separating out organic vs paid channels.
Before getting into the data, we’ll define ROAS.
ROAS stands for “Return on Ad Spend.” It’s calculated using the formula below:
|ROAS = Total Revenue from Campaign ÷ Campaign Spend|
While traditionally used only for paid advertising channels, calculating your organic channels’ ROAS allows you to directly compare them to your paid channels. However, it tends to be tougher to measure ROAS on an organic campaign because there are more people involved in an organic campaign, whereas a paid campaign is mostly run by an ad platform.
Below you’ll find industry averages for ROAS, organized by Paid vs Organic and segmented by channel.
Average ROAS by Channel
If you’re interested in the average ROAS in your particular industry, we’ve included that data below. Note that we only have data for Paid Search & Organic Search.
Average PPC/SEM & SEO ROAS by Industry
|Industry||PPC/SEM ROAS||SEO ROAS|
|Aerospace & Defense||.95||10.35|
|Higher Education & College||1.90||10.40|
|IT & Managed Services||1.10||7.00|
|Oil & Gas||1.40||10.55|
|PCB Design & Manufacturing||1.05||12.40|
|Transportation & Logistics||1.60||9.40|
ROAS vs ROI
ROI differs from ROAS in that ROI also accounts for the cost of closing a sale, and any costs associated with managing a marketing campaign. As a result, ROI paints a clearer picture of exactly how successful your campaigns are. ROI may be calculated using the formula below:
ROI = (Net Profit from Campaign ÷ Total Marketing Spend) x 100%
Not that while ROAS is expressed as a multiple, ROI is usually expressed as a percentage. For most B2B industries, the longer sales cycles result in a significant difference between ROI and ROAS. In the rare industries where the marketing funnel is very short, such as in B2C ecommerce, the distinction between ROAS and ROI is of much lesser importance due to the low costs associated with each lead. This is illustrated in the examples below:
Example A: An ecommerce company spends $100,000 on PPC advertising on a single platform at a rate of $2 per click. This drives 50,000 people to their site which generates online orders totaling $2.5 million. There are no other marketing expenses associated with this campaign. The ROAS and ROI in percentage are as follows:
ROAS (PPC) = $250,000 / $100,000 = 2.50
ROI (PPC) = ($250,000 – $100,000) / $100,000) x 100% = 150%
The results are not exact, but very similar. For this case, the ROAS shows the company is generating $2.50 in revenue for every $1 spent on advertising. The ROI tells us that $1.50 of profit is made for every $1 invested. While there is a difference present here, both demonstrate a successful campaign. Let’s look at another example.
Example B: An engineering company divides it’s marketing budget with $75,000 spent on advertising and $75,000 spent on marketing support and lead nurturing. The campaign returned $160,000 of revenue. The ROAS and ROI are, respectively.
ROAS (Ad Spend) = $160,000 / $75,000 = 2.13
ROI (Ad Spend + Marketing Support) = ($160,000 – $150,000) / $150,000) x 100% = 6.7%
Here, there is a substantial difference between the results. The ROAS indicates that for every $1 spent on advertising, the campaign produced $2.13 in gross revenue. The ROI paints a bleaker, but more accurate picture, in one which every $1 spent brings in less than $0.07 of profit—before accounting for sales and overhead. This is why relying on ROAS without referencing other marketing KPIs leads many companies to overestimate the value of their advertising campaigns.
How to Improve Your ROAS
As you can see from the data, organic campaigns return more than paid campaigns in almost every circumstance. However, it’s important to note that our data comes from clients running well-executed SEO campaigns, which is why the return was so strong. Organic ROAS would be substantially lower if the content produced in the campaign were low quality or the keywords chosen were poorly-targeted.
Taking advantage of the superior ROAS offered by organic channels involves both experienced team members and an understanding of how to execute a campaign properly. Many organizations form agency partnerships in order to ensure they are executing at the highest level. Our own agency specializes in organic marketing through SEO. If you’re interested in discussing a partnership, you can contact us here.