ROAS Demystified: Social Media Ad Spending & Winners
In today’s digital world, Return on Ad Spend (ROAS) is a vital metric businesses use to measure advertising effectiveness. ROAS tells us how much revenue is earned for every rupee spent on advertising. If a business spends ₹100 on ads and earns ₹400, that’s a ROAS of 4:1. Any value over 1:1 indicates profitability, while anything below means the ads are running at a loss.
Why ROAS Matters for Businesses
Understanding ROAS helps companies maximize advertising budgets, improve profitability, and make smarter marketing decisions. Businesses use ROAS to identify the most effective platforms and strategies, ensuring their advertising spend generates strong returns.
Current Global Trends in Social Media Advertising
Social media advertising continues to surge globally. By 2025, global digital advertising spending will reach approximately $700 billion, with around 40% ($280 billion) directed towards social media platforms. Businesses increasingly favor video and mobile ads due to their superior engagement and conversion rates. Mobile advertising now accounts for roughly 70% of total digital ad revenue.
Social Media Ad Spending by Platform
Meta (Facebook & Instagram)
Meta dominates the social advertising space. In 2023 alone, Meta earned around $131.9 billion from ads, making up 97.5% of its total revenue.
- Average costs:
- CPM (cost per thousand impressions): $8.17 (~₹670)
- CPC (cost per click): $0.26 – $0.30
Instagram, in particular, is projected to bring in more than half of Meta’s US advertising revenue by 2025. With the rise of Instagram Reels, businesses have found an effective medium for capturing audience attention.
TikTok
TikTok is another platform seeing rapid growth, especially due to its high engagement with short-form video content.
- Average CPM: $6.16
- Engagement rate: Approximately 2.5%, significantly higher than many other platforms.
TikTok’s affordability and high interaction rates offer attractive ROAS for brands, particularly those targeting younger audiences.
Snapchat
Snapchat maintains its unique position with strong youth appeal.
- Average CPM: $8.37
- Engagement rate: 0.93%
Despite higher CPM rates, Snapchat offers targeted demographic reach and unique advertising formats like augmented reality experiences.
Industry-Specific ROAS Benchmarks
ROAS varies significantly by industry and platform. Here’s a quick look at typical ROAS figures for different sectors:
- Automotive parts: 7x (₹700 revenue per ₹100 spend)
- B2B Software: ~1.6x
- Food & Beverage: ~2x – 5x
- Furniture: ~4.5x – 4.8x
- Healthcare Products: ~1.2x – 2.3x
Industries like automotive parts, furniture, and food generally enjoy higher returns compared to sectors such as healthcare and software.
Who Benefits Most from Social Media Ad Spending?
Platform Winners
- Meta (Facebook & Instagram): Dominates with a vast user base (3.3 billion daily users) and sophisticated AI targeting tools. Meta’s platforms offer detailed targeting options, making them favorites among advertisers.
- TikTok: Offers lower costs and higher engagement rates, increasingly becoming the go-to for youth-focused brands. The interactive nature of TikTok ads ensures strong user engagement.
Advertiser Winners
Companies investing wisely in platforms and formats that suit their industry see significant returns. Businesses leveraging video ads, mobile-first strategies, and precise audience targeting gain the most.
Strategies to Boost Your ROAS
Businesses looking to improve their ROAS can employ several effective strategies:
- Refine Audience Targeting: Use precise geographic and demographic data to reach the most responsive audience.
- Optimize Landing Pages: Ensure your ads lead to engaging, relevant landing pages that encourage conversions.
- Accurate Campaign Tracking: Precisely measure your ad performance to understand what drives returns and adjust strategies accordingly.
- Smart Scaling: Allocate more budget to high-performing ads while cutting losses quickly on poor-performing campaigns.
- Retargeting Ads: Engage users who have previously interacted with your brand, as retargeting often yields higher conversions.
- Continuous Testing: Regularly experiment with different ad formats, visuals, and copy to identify winning combinations.
Emerging Trends: AI and Automation
Artificial Intelligence (AI) is transforming social media advertising. By late 2026, platforms like Meta plan to roll out fully AI-generated ads, streamlining ad creation, targeting, and optimization. Automation will significantly reduce advertising costs while boosting effectiveness, particularly benefiting small and medium-sized businesses (SMBs).
Moreover, influencer marketing is becoming an increasingly vital component, with brands dedicating up to 50% of their marketing budgets to influencer collaborations due to high engagement and authenticity.
Conclusion: Making Smart Advertising Decisions
To achieve strong ROAS (Return on Ad Spend), businesses must stay updated on the latest advertising trends, platform performance, and evolving strategies. Platforms like Meta and TikTok currently lead the way by delivering high returns through advanced targeting and engaging content formats.
Achieving high ROAS requires:
- Precise audience targeting
- Optimized landing pages
- Continuous A/B testing
- Integration of emerging technologies like AI
Companies that adapt to these strategies quickly are better positioned for sustained profitability and growth. However, in many cases, only the platforms are making consistent profits.
One of my friends runs a D2C fashion brand. He usually spends ₹4 lakhs a month on Meta ads and generates ₹8 lakhs in revenue — a 2x return. Yet, it feels like the real winners are the platforms themselves.
8 lakhs : Revenue a month
4 lakhs : meta Ads Spent
2.5 – 3 lakhs : Production Cost (Models, Photographer, location) Staff, Shipping, web infra, Inventory, etc.
By understanding and leveraging these insights, businesses can transform their advertising spend into a powerful growth engine.
Q&A
Q: What does a 4:1 ROAS mean?
A: It means for every ₹1 spent on ads, ₹4 in revenue is generated.
Q: Which platform dominates social media ad revenue?
A: Meta (Facebook & Instagram) leads, earning $131.9 billion from ads in 2023.
Q: Why do brands prefer TikTok for advertising?
A: Because of its low CPM and high engagement, especially among younger audiences.
Q: What strategies help boost ROAS?
A: Precise targeting, optimized landing pages, retargeting, and continuous testing.
Q: Who profits most from ad spending—brands or platforms?
A: Often, the platforms like Meta and TikTok benefit more than the advertisers.
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