April 8, 2024

Return On Advertising Spend, (ROAS), is a marketing metric that measures the efficacy of a digital advertising campaign. ROAS helps online businesses evaluate which methods are working and how they can improve future advertising efforts. The definition of ROAS Return on ad spend (ROAS) is an important key performance indicator (KPI) in online and mobile marketing. It refers to the amount of revenue that is earned for every dollar spent on a campaign. Based on the return on investment (ROI) principle, it shows the profit achieved for each advertising expense and can be measured both on a high level and on a more granular basis. Whether you want to measure ROAS for an entire marketing strategy or look at performance at the campaign, targeting, or ad level, it’s a key metric for measuring and determining strategic success in mobile advertising. How to calculate return on ad spend (ROAS) ROAS can be calculated with a simple formula: ROAS = (revenue attributable to ads / cost of ads) x 100 Think about it this way: Let’s say you’re running an ad campaign that you invest $1000 into, and you are able to attribute $3000 in revenue to those ads. Using the ROAS formula, you can determine an ROAS of 3, which is a very good result. Calculating ROAS becomes a little bit more complicated when determining what the cost of ads is, and there are a couple of decisions to be made. Firstly, you need to determine whether you want to track the dollar amount spent on a specific platform, or if you want to bundle extra advertising costs in. For example: Vendor costs: Vendors you work with will most likely take commission fees for running the ad campaign. Team costs: You need to pay a person to set-up and manage the campaigns, whether they’re in-house or at an agency. Why Return On Ad Spend matters ROAS is essential for quantitatively evaluating the performance of ad campaigns and how they contribute to an online store’s bottom line. Combined with customer lifetime value, insights from ROAS across all campaigns inform future budgets, strategy, and overall marketing direction. By keeping careful tabs on ROAS, ecommerce companies can make informed decisions on where to invest their ad dollars and how they can become more efficient. What is the difference between ROAS and ROI? As covered above, ROAS refers to return on ad spend, while ROI refers to return on investment. When calculating an ROI, you’re looking at measuring the return on a particular investment relative to what the cost of that investment was. It’s a calculation of your net profit and the investment, with a formula that generally looks like this: ROI = (Net profit / net investment) x 100 While similar but not the same, ROAS aims to help advertisers and marketers determine the overall efficiency of online or mobile marketing campaigns by calculating the exact amount of money that is earnt from a campaign relative to the exact amount of money that was invested into it. One important takeaway is that a negative ROI can still be a positive ROAS, because your overall investment might be higher than the profit generated, but relative to the investment in the advertising campaigns themselves (depending on how you calculate that), the ROAS itself can be positive. Should I use ROI or ROAS? When creating a campaign or marketing strategy, ROI vs. ROAS is not an either/or decision. ROIs are best leveraged to help gain visibility over long-term profitability, and ROAS might be more helpful in optimizing for short-term or very specific strategies. When building out a high-level mobile marketing campaign or strategy, utilizing both ROI and ROAS formulas is a best practice. Within mobile marketing, ROI and ROAS are both crucial metrics for marketers and advertisers to work with. Whereas ROI can be applied high-level to measure overall profits, ROAS will help you determine how much a campaign is contributing to those overall profits. FAQs What is ROAS? ROAS stands for Return on Ad Spend. It is a marketing metric used to measure the revenue generated for every dollar spent on advertising. How is ROAS calculated? ROAS is calculated by dividing the revenue generated from advertising by the cost of the advertising campaign. The formula is: ROAS = Revenue from Ads / Cost of Ads. What’s the difference between ROAS and ROI? While both metrics measure the effectiveness of an investment, ROI (Return on Investment) takes into account all costs associated with an investment, not just advertising costs. ROAS specifically focuses on revenue generated from advertising spend. 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One of the main importance of financial planning is that it helps organizations to achieve their goals. It identifies and prioritizes the financial goals of your business and enhances decision-making to achieve the established goals. In the process of creating the financial plan, you must tailor your plan with your business’s financial goals. The goals are set based on the purpose of the business and the financial plan serves as a roadmap for the attainment of these goals. However, when setting goals for your business, ensure that you set SMART goals. Therefore, a financial plan enhances the financial success of organizations. What is financial planning? Once a vision and objectives have been determined, a business organization creates its financial plan. Financial plan is a document that depicts the current financial situation of the business and identify its future goals and objectives and how business will achieve them. The process of achieving such business goals and objectives and how does it afford to achieve them is known as financial planning. Financial planning is a systematic process that involves highly creative thinking skills.  Financial planning includes various activities such as identifying the types and amount of resources required to achieve those activities, calculation of the cost of such resources to be utilized, identification of risks involved, evaluation of the business environment, and also validate the vision and objective already set up. What are the objectives of financial planning? Evaluation of business objectives– Before the implementation of business procedures, methods, techniques, and strategies, the objective of financial planning includes evaluate them. Verification of vision and objectives– The vision and objectives of the business that has already set up need to be verified before formation of financial plan. This is an essential objective of financial planning particularly in such a dynamic business environment. Identification of funds that are available to achieve objectives– Generation of funds and making them available whenever required is the key area in which financial planning is proficient. It also includes the estimation of funds required. Estimation of time and source of funds– Availability of funds at the right time and right place is as essential as generation of funds. The source of funds is equally an important factor to achieve business goals. Estimation of costs involved in the creation and implementation of financial plan– The cost of the plan may change with the passage of time but a realistic cost needs to be estimated for the successful creation and implementation of the financial plan. Identification of risks involved with financial plan– One of the important objectives of financial planning is to identify the risk and issues associated with such financial plan and hence saves lot of time and money at an early stage and counter strategies are prepared accordingly. Generation of capital structure– The capital structure defines the nature and proposition of capital required in the business. It also includes planning of funds required for short term and long-term purpose which also concerns debt-equity ratio. Avoid raising of unnecessary funds– Raising excessive funds than required is as bad as inadequate or shortage of funds. Excess of funds does not add returns rather it adds cost to the company. It is one of the most important objectives of financial planning that make sure that company does not raise unnecessary resources. Why financial planning is important in a business? It expedites raising of funds– Financial planning maintains a balance between excess of funds and shortage of funds. It recognizes the optimum funds required for a business to avoid under capitalization and over capitalization. It provides an aid in fixing appropriate capital structure– Financial planning helps in raising short-, medium- and long-term funds from various sources at different stages. It also determines how to raise funds for various stages. Allocation of funds at right place– Creation of financial plan is important for allocation of funds at various investment opportunities. It builds confidence among investors– A business having financial plan intends to attract more investors by providing true and correct information about the business and not guessing things hence, it builds confidence among them. It helps in avoiding business shocks– In any uncertain situations, financial planning helps in avoiding business shocks by forecasting financial requirements. It helps in growth and expansion of business– Financial planning helps in growth and expansion of business Programmes which led to survival of such business in long run. Advantages of financial planning Provides direction to financial decision– Financial plan decides various investment opportunities that are available to a business and can also avoids various financial problems and it also helps in providing direction to financial decisions. Optimum utilization of resources– Financial planning helps a business organization to utilize their financial resources at a right time and at a right place and it make sure that such resources do not get waste and remains unutilized. Helps in reducing cost– Financial planning helps in reducing unnecessary cost and also helps to save money and hence it allows the company to use its resources in a right direction. Helps in raising funds easily– The financial plan depicts the goals and objectives of the company and risks and uncertainties involved in achieving such goals. The prospective investors or bank will analyze such business plan and it leads to generation of confidence among them which helps organization in raising funds easily. Brings Transparency with staff as well as investors– A business plan can be shared with the employees and staff of the organizations at meetings that helps employees and staff to assess real data and hence keep a watch on business. Process of financial planning Determine current financial situation- It is the first step of financial planning process in which company determines the current situation with respect to income, savings, expenses, etc. Develop financial goals- Establishing goals is the foundation for financial planning process. Identification of alternative action- For making good decisions, developing alternatives is very important. Some of the possible actions are continue the same course of action, expand or change the situation or take

Consumer durables, aka durable goods, are products that have an average life of 3 years or more, and hence they are not purchased and replaced on a frequent basis by consumers. The opposite of consumer durables are non durable goods, which include fast-moving consumer goods (FMCG) and CPG. What Are Consumer Durables? Consumer durables, also known as durable goods, are a category of consumer goods that do not wear out quickly and therefore do not have to be purchased frequently. They are part of core retail sales data and are considered durable because they last for at least three years, Durable goods derive their name from the fact that they last in value for a relatively long time. An individual’s wealth is preserved by spending a high proportion of their income on durable, investment, or capital goods because the goods retain their economic value for longer periods of time. Investors, business owners, and economists closely monitor expenditures and new orders for consumer durables as a sign of sustainable economic growth. Durable goods consumption leads gross domestic product (GDP) over the business cycle. So, if durable goods is above its consumption trend, then the GDP is also likely to be above its trend in the next quarter Types of Consumer Durables Some examples of consumer durables are large and small appliances, furniture and furnishings, carpets and rugs, rubber tires, lead-acid automotive batteries, consumer electronics, luggage, sporting goods, and household goods. Automobiles, mobile homes, boats, and fine jewelry are also durable goods Consumer Durables vs. Nondurable Goods The basic difference between durable and nondurable goods is that the former last for three years or more, while the latter are used up in fewer than three years. Also, durable goods maintain their economic value much longer than nondurable goods. Durable goods tend to be more expensive than nondurable goods, so people usually invest in them when the economy is good, and they are feeling prosperous. However, this rule of thumb doesn’t always hold—consumer spending on durable goods rose during the COVID-19 pandemic (after a brief but sharp contraction), which battered the economy. Lockdowns and social distancing reduced the demand for services, while government subsidies intended to help people weather the crisis financially increased disposable income FAQs What are Fast Moving Consumer Durables (FMCD)? FMCD refers to consumer durables that have a high turnover rate and are quickly consumed or replaced by consumers. These products are typically non-perishable and have a relatively short lifespan compared to other consumer durables. What Are Some Examples of Consumer Durables? Consumer durables, also known as durable goods, are products that last for three years or more. They include mobile homes, large and small appliances, furniture and furnishings, carpets and rugs, automobiles, rubber tires, lead-acid automotive batteries, boats, consumer electronics, luggage, sporting goods, household goods, and fine jewelry. What factors influence the demand for FMCD? Several factors influence the demand for FMCD including changes in consumer preferences, disposable income levels, technological innovations, marketing strategies, pricing, and overall economic conditions. 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