Every gaming business must balance three essential metrics which are often at odds with one another:
<aside> 💵
Optimizing one of these three metrics often comes at the expense of the others.
</aside>
For example, if you are solely focused on reducing Customer Acquisition Cost (CAC+), you may acquire a high volume of low-quality customers. While this lowers CAC+ in the short term, it often comes at the expense of retention and Net Revenue Per Active Player (NRPAP). Poor-quality traffic results in players who don’t stick around long and don’t spend much money.
On the other hand, if you focus exclusively on monetization, you run the risk of over-monetizing players in the short run, which will boost NRPAP but ultimately kill long-term retention.
The challenge is finding the right balance between acquisition efficiency, retention, and monetization.
<aside> 💵
At Betty Canada, Return on Ad Spend (ROAS) serves as the primary metric for managing this trade-off.
</aside>
Unlike CAC+, retention, or NRPAP in isolation, ROAS incorporates all three. It measures not only how efficiently customers are acquired, but also whether those customers stay, monetize, and ultimately generate value for the business.
This makes ROAS one of the most important metrics for evaluating sustainable growth.
Return on ad spend (ROAS) measures how much Gross Profit is generated for every dollar spent on advertising.
<aside> 💵
ROAS = Gross Profit from customers acquired through ads ÷ Cost of ads
</aside>
While the actual ROAS calculation can be more nuanced, this formula captures the core concept.
We use Gross Profit for our ROAS calculations, rather than Net Gaming Revenue (NGR) because it reflects the actual economic value generated after all direct costs have been paid.
<aside> 💵
Betty calculates ROAS using Gross Profit rather than NGR.
</aside>
Using Gross Profit ensures that customer acquisition performance is evaluated based on profitability rather than revenue generation alone. This is particularly important when comparing different jurisdictions, where tax rates and operating costs can vary significantly.
A more powerful way to analyze ROAS is through ROAS by Cohort.