What is iROAS?
iROAS, or incremental return on ad spend, is the extra revenue your advertising caused for every dollar spent on it. To find it, divide incremental revenue by ad spend. Only revenue that wouldn't have happened without the ads counts.
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How to calculate iROAS
Divide incremental revenue by the corresponding tested ad spend. For a spend-change experiment, use incremental revenue and incremental spend versus control, normalized to the same population and period.
How iROAS differs from ROAS
ROAS divides attributed revenue by spend and can include sales that would have happened anyway. iROAS uses estimated incremental revenue from an experiment or a model with stated assumptions. Its difference from reported ROAS depends on the data and methods, rather than a guaranteed ordering.
Getting incremental revenue
Experiments such as holdout, lift, and geo tests estimate incremental revenue by comparing the treatment outcome with a comparable control baseline. Normalize for unequal group sizes and account for the test design before subtracting revenue. Marketing mix models can also estimate incremental revenue, subject to their assumptions.
For a no-ad baseline, divide incremental revenue by the ad spend being tested. For a spend-change experiment, divide the revenue change caused by the treatment by the incremental spend versus control. Revenue and spend must cover the same population and period. Compare the result with a break-even point based on pre-ad contribution margin; fixed overhead is a separate consideration.
Disclaimer
This calculator is for informational purposes only, and we don't guarantee the accuracy of its results. You're responsible for verifying any results before relying on them. See our terms of use.
Common questions
How do you calculate iROAS?
Divide incremental revenue by the corresponding ad spend, or by incremental spend when testing a spend change. For example, $60,000 of incremental revenue caused by $20,000 of tested spend gives 3x. Negative incremental revenue gives a negative iROAS.
What is a good iROAS?
It depends on your margins and goals. A good iROAS is one above your break-even return, so compare it with your costs and with results from your other channels.
Is iROAS always lower than ROAS?
Usually, because ROAS includes sales that would have happened without the ads. It's not guaranteed, since the two come from different data sources.
How often should you measure iROAS?
Test when you make big budget decisions or when a channel's reported results seem too good. Results can change with creative, audience, and season, so retest periodically.
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