B2B ROAS calculator

Are you looking to understand what Return on Ad Spend (ROAS) is and how it differs in B2B and B2C marketing campaigns? 

In this article, we’ll delve into how ROAS is calculated for B2B marketing, why it’s important, and what strategies you can use to improve it. 

You’ll also learn about the primary differences between B2B and B2C ROAS calculations, including the length and complexity of the sales cycle and the goals of each campaign. 

By the end of this article, you’ll have a clear understanding of how to optimize your B2B advertising campaigns to drive revenue growth.

What is Return on ad spend (ROAS)?

Return on ad spend (ROAS) is a marketing metric that measures the amount of revenue generated for each dollar spent on advertising. 

It is calculated by dividing the total revenue generated by the advertising campaign by the total cost of the advertising campaign. ROAS helps businesses evaluate the effectiveness of their advertising campaigns and determine if they are generating a positive return on investment (ROI). 

Generally, a higher ROAS indicates that an advertising campaign is more effective, while a lower ROAS indicates that the campaign is not generating enough revenue to justify the cost.

What is the difference between B2B and B2C return on ad spend (ROAS)?

The primary difference between B2B and B2C return on ad spend (ROAS) is the complexity and length of the sales cycle.

B2B sales cycles are typically longer and more complex than B2C sales cycles. B2B companies often sell products or services that are more expensive, require more consideration, and involve more stakeholders. This means that B2B ROAS calculations may take longer to determine as they often involve multiple touchpoints across a longer period of time.

In contrast, B2C sales cycles are usually shorter, and the decision to purchase is often made by a single individual. Therefore, B2C ROAS calculations are usually more straightforward and easier to determine.

Additionally, B2B and B2C marketing campaigns often have different goals. B2B campaigns are usually designed to generate leads, whereas B2C campaigns are often focused on generating immediate sales. This can impact the metrics used to evaluate ROAS, as B2B campaigns may require a longer time frame to evaluate the impact of the campaign on lead generation and conversion rates.

How do you calculate B2B return on ad spend?

To calculate the return on ad spend (ROAS) for a B2Badvertising campaign, follow these steps:

1. Determine the revenue generated from the advertising campaign: Calculate the total revenue generated from the advertising campaign by tracking the sales or leads generated by the campaign.

2. Calculate the total cost of the advertising campaign: Add up all of the costs associated with the advertising campaign, including the cost of the ad placements, creative production, and any other expenses related to the campaign.

3. Divide the revenue generated by the advertising campaign by the total cost of the campaign: Divide the revenue generated by the advertising campaign by the total cost of the campaign to get the ROAS. The formula is as follows:

ROAS formula

ROAS = Revenue generated from advertising campaign / Total cost of advertising campaign

ROAS calculation example

For example, if a B2B advertising campaign generates $100,000 in revenue and costs $20,000, the ROAS would be calculated as:

ROAS = $100,000 / $20,000 = 5

This means that for every dollar spent on the advertising campaign, the business generated $5 in revenue.

Why is important for B2B marketers to know their ROAS?

Knowing the return on ad spend (ROAS) for a B2B advertising campaign is essential for several reasons:

• Helps to evaluate the effectiveness of the advertising campaign: ROAS is a metric that provides a clear indication of how effective an advertising campaign is in generating revenue. By tracking ROAS, businesses can determine which campaigns are most effective and allocate their advertising budget accordingly.

• Assists in optimizing marketing strategies: By understanding the ROAS of a campaign, businesses can identify areas where they can improve their marketing strategies. For example, if the ROAS is low, they may need to adjust their targeting or messaging to improve conversion rates.

• Enables better decision-making: Knowing the ROAS of an advertising campaign can help businesses make more informed decisions about where to allocate their marketing budget. They can choose to invest more in campaigns that generate a high ROAS and scale back on campaigns that are not generating a positive return on investment.

• Provides insight into the customer journey: B2B sales cycles can be long and complex, with multiple touchpoints. By tracking ROAS at each stage of the customer journey, businesses can gain insights into which touchpoints are most effective and adjust their marketing strategies accordingly.

Overall, knowing the ROAS of a B2B advertising campaign can help businesses optimize their marketing strategies, make informed decisions about budget allocation, and drive revenue growth.

What can you do to improve your return on ad spend?

To improve the return on ad spend (ROAS) for a B2B (business-to-business) advertising campaign, consider the following strategies:

1. Refine your targeting: Ensure that your advertising campaigns are targeted to the right audience. This can involve refining your targeting criteria to focus on specific industries, job titles, or other relevant factors.

2. Improve your ad copy and creative: Ensure that your ad copy and creative are compelling, clear, and aligned with the needs and pain points of your target audience. Consider testing different ad variations to see which ones perform best.
   

3. Optimize your landing pages: Ensure that your landing pages are optimized for conversion, with clear and compelling calls-to-action. Test different page layouts, headlines, and messaging to see what resonates best with your target audience.
   

4. Leverage retargeting: Retargeting campaigns can be highly effective in reaching potential customers who have already shown an interest in your product or service. Use retargeting ads to follow up with users who have visited your website or engaged with your content.
   

5. Test different channels and formats: Consider testing different ad formats and channels to see which ones perform best for your target audience. For example, you may find that LinkedIn ads are more effective than Facebook ads for reaching B2B decision-makers.

6. Monitor and analyze performance: Continuously monitor the performance of your advertising campaigns and analyze the data to identify areas where you can make improvements. Look for patterns or trends in the data that can inform your optimization strategies.

Measure and analyze performance across all your revenue-generating activities with Dreamdata’s Performance feature.