Return on ad spend
Return on ad spend is collected production divided by ad spend over the same cohort.
Two words in that sentence do all the work. Collected, because reporting treatment planned production instead roughly doubles the ratio. Cohort, because a lead generated in January that closes in July belongs to January, and reporting by close month makes any month look like whichever old cohort happened to land in it.
A return on ad spend figure with neither the production definition nor the cohort window attached is not comparable to anything, including itself the following month.
The formula
Divide collected production attributable to the cohort by the ad spend for that same cohort, over a stated date window.
return on ad spend = collected production / ad spend reported as a multiple, for example 8.5x
What is included and what is excluded
Counts
- Collected production, reconciled against the practice management system
- Media spend for the same lead cohort
- A stated cohort date window
Does not count
- Treatment planned or presented production
- Approved financing that has not disbursed
- Production from a cohort outside the window
- Refunded payments
A worked example
A cohort of 15,000 dollars in spend produces 400,000 dollars of treatment planned work.
- 01Treatment planned: $400,000
- 02$400,000 / $15,000 = 26.7x on planned
- 03Collected from the same cohort: $190,000
- 04$190,000 / $15,000 = 12.7x on collected
The honest figure is 12.7x. The planned figure is 26.7x and nobody has technically lied.
How this differs from
- Collected
Collected is the numerator, and swapping it for planned doubles the ratio.
- Cost per seated arch
That is an absolute cost you can compare to your margin. This is a ratio to revenue.
- Offline conversion attribution
Attribution is what makes a collected numerator traceable to the spend at all.
These definitions come from our published measurement standard. Read The Arch Standard for the reporting rules they sit inside, or see every term.
Want this measured in your practice? A consult walks through how we track it, if that is useful.
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