ROAS (Return on Ad Spend)

ROAS measures how much revenue you earn for every unit of currency spent on advertising.

ROAS is the most common metric for ecommerce ads on Meta, Google, TikTok and Amazon. A ROAS of 4 means every 1 spent brought in 4 in revenue.

A high ROAS is not automatically profitable. Compare it with your break-even ROAS, which depends on your margin.

Formula

ROAS = Revenue from ads ÷ Ad spend

Break-even ROAS = Price ÷ Profit before ads

A campaign spends 2,000 and generates 7,000 in revenue, so ROAS is 3.5.

Ad revenue ÷ spend → ROAS.

ROAS, ACoS and profit after ads.

Margin → minimum ROAS.

Know the ad return you need to profit.

What is a good ROAS?

One comfortably above your break-even ROAS.

How is ROAS different from ROI?

ROAS uses revenue; ROI uses profit.