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ROAS or CPA? Which Is More Important?

You know, if there’s one thing I love about digital marketing is data. Unlike traditional methods, where success can feel like throwing random shots in the dark, the beauty of digital marketing lies in its trackability. With just a glance at the data, you can understand which strategies are hitting the mark and which ones are falling short.

But amidst the sea of trackable metrics, two often stand out: ROAS and CPA.

So, which one holds more weight? When should you be keeping an eye on ROAS, and when does CPA take the spotlight? And, most importantly, how do these metrics fit into your marketing strategy?

We've got all the answers lined up for you in this article, so make sure to stick around till the end!

Without further ado, let's dive into what CPA and ROAS mean and figure out which metric businesses should focus on to make the most out of their marketing efforts.

What Is ROAS?

ROAS stands for Return on Ad Spend, used to understand how much revenue is generated for every dollar spent on advertising.

Suppose you run an online ad campaign for your new product, spending $500 on ads. Over the course of the campaign, those ads bring in $2,000 in revenue. 

To calculate the ROAS, you'd divide the revenue generated ($2,000) by the amount spent on ads ($500), giving you a ROAS of 4.

So, for every dollar you spent on advertising, you earned $4 in revenue. This indicates that your advertising campaign was successful in generating a positive return on investment. 

ROAS helps businesses understand the profitability of their advertising strategies and can be used to optimize future campaigns for better results.

What Is CPA?

CPA stands for Cost Per Acquisition (or sometimes Cost Per Action). It's a metric used to measure the total cost incurred to acquire a customer or generate a specific action, such as a sale, lead, or download.

Let's break it down with an example: You're running an online ad campaign for your new mobile app. You spend $500 on the campaign, and as a result, you get 50 people to download your app. 

To calculate the CPA, you'd divide the total cost ($500) by the number of acquisitions (50 downloads), giving you a CPA of $10 per download.

CPA is an important metric in digital marketing because it helps businesses understand if their marketing efforts are working. A lower CPA indicates that you're acquiring customers or actions at a lower cost, which is usually a good thing. 

At the end of the day, the goal here is to achieve the lowest possible CPA while maintaining the desired level of customer quality.

CPA vs. ROAS: Which Is More Important?

If you want to know how much it costs to get each customer or make each sale, keep track of your CPA. It helps you figure out how efficiently you're spending your marketing money to get results. For example, if you're trying to get people to sign up for your newsletter, CPA tells you how much you're paying for each new subscriber.

On the other hand, if you're more interested in knowing how much money your ads are making you, then you'll want to look at ROAS. It shows you how much revenue you're getting back for every dollar you spend on advertising. So, if you're selling products online, ROAS tells you if your ads are bringing in enough money to make them worth the investment.

So, if you're more concerned about the bottom line and want to know how effective your ads are in driving revenue, ROAS is the metric you'll want to focus on.

According to Rockerbox, you can think of it like dating:

Let's say you're juggling a couple of dating apps, like Tinder and Bumble. You notice that Tinder brings you a flood of matches, while Bumble's approach, connecting you with people you share mutual friends with, results in fewer matches.

In dating terms, Tinder seems to have the better "CPA" because it offers more potential matches, so you naturally invest more time swiping there. But as you go on multiple dates from Tinder, you realize that they often don’t lead to deeper connections.

On the flip side, even though Bumble offers fewer matches, the ones it does provide are often more promising. A single date from Bumble can lead to multiple follow-up dates—a higher "ROAS."

So, if you're looking to date casually and meet as many people as possible, Tinder might seem like the obvious choice due to its higher match rate. However, if you prioritize quality over quantity and seek meaningful connections, Bumble could offer a better dating experience despite its lower match rate.

At the end of the day, both metrics are important, but which one you focus on depends on what you're trying to achieve with your marketing. If you want to keep costs down, focus on CPA. If you want to maximize your profits, keep an eye on ROAS.


Well, aren’t we glad you asked! We at DigiCom are obsessive data-driven marketers pulling from multi-disciplinary strategies to unlock scale. We buy media across all platforms and placements and provide creative solutions alongside content creation, and conversion rate optimizations. We pride ourselves on your successes and will stop at nothing to help you grow.


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