Which KPI measures advertising efficiency by revenue generated per unit of spend?

• A. Customer Lifetime Value
• B. Return on Ad Spend
• C. Average Order Value
• D. Impressions

Answer: (B)

Return on Ad Spend shows advertising efficiency by revenue generated per unit of spend. It’s calculated by dividing the revenue attributed to ads by the amount spent on those ads. For example, if a campaign brings in $5,000 in revenue and $1,000 in ad spend, ROAS is 5, meaning every dollar spent produced five dollars in revenue. This directly reveals how effectively your ad dollars are turning into sales, which is exactly what you want to measure for paid campaigns. Other metrics look at different things: lifetime value assesses a customer’s long-term value beyond a single campaign; average order value measures how much customers typically spend per order; impressions count how many times an ad was shown, not how much revenue it generated. Remember that ROAS focuses on revenue relative to ad spend, not overall profit, so you may also consider margins and other costs when evaluating profitability.