Which metric assesses the effectiveness of ad spending by determining revenue generated per dollar spent?

The metric that effectively assesses the efficiency of ad spending by calculating the revenue generated for each dollar spent is Return on Ad Spend (ROAS). ROAS is a critical performance indicator in digital marketing that allows businesses to evaluate the effectiveness of their advertising campaigns. It is calculated by dividing the total revenue generated from ad campaigns by the total amount spent on those advertisements.

This metric provides insight into how well your advertising expenditures are converting into revenue, enabling marketers to gauge the effectiveness of their strategies. A higher ROAS indicates that the advertising campaigns are performing well, returning more revenue relative to the amount invested.

In contrast, Cost per Click (CPC) measures the cost incurred for each click on an advertisement, focusing on traffic generation rather than overall revenue generation. Ad impression share refers to the percentage of times an ad is shown compared to the total number of times it could have been displayed, which does not directly measure revenue. Conversion rate measures the percentage of visitors who take a desired action after clicking on an ad, such as making a purchase, but it does not quantify the financial return associated with ad spending. This differentiation highlights the specific focus of ROAS on the financial efficiency of advertising efforts.