Boost Crowdfunding Success: Quick ROAS Guide

ROAS (Return on Ad Spend) is a critical metric in paid marketing for crowdfunding campaigns. While BackerKit cannot calculate it for you due to unique project costs, we can offer guidance on determining your own ROAS.

Understanding ROAS

ROAS is the ratio of money spent on advertising to pledges generated. For instance, a $100 ad spend resulting in $400 in pledges yields a 4x ROAS. It's the key metric in assessing campaign success.

Setting Your Target ROAS

No ROAS is inherently good or bad. High ROAS may indicate underinvestment, while low ROAS could mean losses per pledge. To set your target ROAS:

Calculate Break-Even ROAS:

1. Identify project costs per pledge.
2. Determine remaining margin per pledge.
3. Divide average pledge by margin per pledge to get break-even ROAS.

Example: $100 average pledge / $35 margin per pledge = 2.86x break-even ROAS

Consider Margin and Goals:

1. If it costs more than your margin to drive a pledge, you incur losses.
2. Set a target ROAS higher than break-even to ensure profitability.

Additional Considerations

Campaign Dynamics:

• Pledge behavior varies; allocate more budget during campaign peaks.
• Maintain a consistent target ROAS, adjusting spend as needed.

Volume vs. ROAS:

• A low ROAS allows more spending and drives proportionally more pledges.
• A high ROAS constrains ad spend, limiting pledge volume.

Realistic ROAS Targets:

• Avoid overly ambitious ROAS targets (e.g., over 4x) that may not align with campaign success.

Scaling and Cost Benefits:

• Explore whether increasing backers reduces unit costs, impacting marketing plans positively.

Long-Term Value (LTV):

• Consider the LTV of acquiring a new backer; factor in potential future support and adjust ROAS accordingly.

Remember to account for all costs, adapt to campaign dynamics, and set a realistic target ROAS for a successful crowdfunding venture.