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Measuring TV Performance with ROAS

This article contains the following:

What is ROAS?

Many brands look to ROAS (Return on Ad Spend) as a source of truth for media strategy. ROAS measures the amount of revenue generated from every dollar spent on advertising. It helps guide spending and gives you an apples-to-apples comparison across marketing channels. 

How is ROAS calculated?

ROAS is the amount of total revenue divided by total spend. 

  • Total revenue = Total attributable conversions x average revenue of all conversions 
  • Total spend = Sum of spot (linear) or impression (streaming) costs within a selected date range 

Note: The conversion event is determined by the values you pass to us through Tatari Tag Manager (e.g. purchase, subscription, etc.). 

As a simple example, if you spend $10,000 on linear TV ad spots or streaming impressions, and your business generates $20,000 in revenue, your ROAS will be 2. So for every dollar spent, your return would be $2. 

How do I view ROAS? 

You can view ROAS metrics if you’re passing revenue data to us through Tatari Tag Manager. 

Note: ROAS metrics are only available for brands with websites (not apps) at this time.

If you don’t yet pass revenue data to us or are subscription-based and aren't passing LTV, please start here. 

If you currently pass revenue data to us, you can view aggregated ROAS metrics in your Tatari dashboard on the conversions chart, starting from the first day you began sending us revenue data. 

If you’re sending revenue data but don’t see your ROAS metrics, you may not have enough data yet (i.e. you recently started with Tatari), or there is an issue with how you send us revenue data. Please reach out to your Client Services Manager for more info.  

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Key features:

  • Reporting view: Viewable on a weekly basis for the date range selected in your Tatari dashboard. 
  • Performance Metric: ROAS is shown by one of your dashboard's performance metric filters. If you have multiple metrics, you can toggle between them.
     
  • Attribution method: ROAS from linear TV is shown as incremental attribution (not view-through). In other words, this is revenue generated directly as a result of your TV advertising and not other marketing channels. ROAS from streaming is shown as both view-through and incremental attribution.

Understanding Results

Needless to say, a higher ROAS is always better. Your exact ROAS target will depend on many factors (read more at the bottom of this article) and there are a few other considerations below. 

The Halo Effect of TV 

TV is an effective performance channel, but its performance doesn’t solely translate into direct conversions. TV ads also have a “halo effect” i.e. boosting traffic (and thereby ROAS) in other digital and social channels beyond a brand’s point of sale. To understand the comprehensive return on a TV impression, look to see if ROAS has increased after a TV ad campaign on other channels (e.g. Facebook or SEM). If Halo is strong, ROAS in digital may double, supporting a lower ROAS on TV (possibly below 1) and vice versa. 

Factor LTV Models into ROAS 

The revenue generated from a TV commercial often stretches well beyond the (first) purchase.  For example, for subscription-based companies, customers are most likely to continue returning. As many marketers are well-aware, ROAS is more accurate when it incorporates LTV models as opposed to immediate or short-term revenue. In TV, as in other channels, looking at revenue in isolation obscures the real value of the ad in acquiring valuable customers. If you're a subscription-based brand, please ensure you're sending LTV through Tatari Tag Manager.