ROAS (Return on Advertising Spend) is calculated with the formula Revenue/ Advertising investment.
With this formula you can measure the impact on sales: the higher the ROAS, the better the investment performance.
Having a high ROAS does not only mean that the performance of our campaigns is good and that we are generating revenue, but also that we can generate more sales if we increase our investment.
Investment has a direct impact on sales, so we need to regulate our budget in order to increase them and thus maintain profitability.
For this, it is necessary to define a ROAS aim with which you are comfortable. For instance, if you have a 500% ROAS, for every 1 dollar invested you are gaining 5 dollars. You should evaluate, depending on your business, whether this return is profitable.
If this is the case, if you happen to receive 10 dollars for every dollar invested (this is, a 1000% ROAS) it is advisable to use this ratio to keep on investing in digital marketing and get even more sales.
In conclusion, if your actual ROAS is higher than your aimed ROAS, it means that there is a great opportunity to sell more. If the investment is not increased, you would be missing a chance to make your business grow!