Advertising glossary

What is AOV (average order value)?

Definition

AOV is the average amount a customer spends per order. Raising it is one of the easiest ways to make advertising more profitable.

AOV explained

Bundles, free shipping thresholds, upsells and post-purchase offers all raise AOV. A higher AOV lowers your break-even ROAS because each acquired order brings in more gross profit.

Formula

AOV = revenue ÷ number of orders

Example

Revenue of 12,000 dollars from 240 orders is an AOV of 50 dollars.

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Keep learning

ROAS (return on ad spend)ROAS measures how much revenue your ads generate for every unit of currency spent.Break-even ROASBreak-even ROAS is the return on ad spend where ad revenue exactly covers product costs and ad spend.LTV (customer lifetime value)LTV is the total revenue or profit a customer generates over their relationship with your brand.