Metrics

ROAS (Return on Ad Spend)

A marketing metric that measures the revenue generated for every dollar spent on advertising.

ROAS (Return on Ad Spend) is calculated by dividing revenue by ad spend. For example, if you spend €10,000 on ads and generate €40,000 in revenue, your ROAS is 4x or 400%. ROAS is one of the most important metrics for performance marketers, but it's also one of the most misunderstood. Different platforms calculate ROAS differently, leading to discrepancies that can confuse marketing teams and CFOs. Platform-reported ROAS often includes view-through conversions, uses different attribution windows, and may not account for returns or cancellations. This is why reconciling ROAS across platforms is critical for accurate reporting. True ROAS should be calculated using actual revenue from your ecommerce platform, not platform-reported conversions.

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Related Terms

External Resources

Meta ROAS GuideGoogle Ads ROAS

Frequently Asked Questions

What is ROAS?

ROAS (Return on Ad Spend) is a marketing metric that measures the revenue generated for every dollar spent on advertising. It's calculated by dividing revenue by ad spend. For example, if you spend €10,000 on ads and generate €40,000 in revenue, your ROAS is 4x or 400%.

What is a good ROAS?

A good ROAS depends on your industry and profit margins. E-commerce typically targets 4-6x ROAS, beauty brands aim for 3-5x, and professional services need 5-8x. However, ROAS alone doesn't indicate profitability—you must factor in your gross margin to calculate break-even ROAS.

How do you calculate ROAS?

ROAS is calculated using the formula: Revenue ÷ Ad Spend. For accurate ROAS, use actual revenue from your e-commerce platform (like Shopify), not platform-reported conversions from Meta or Google Ads, which may include view-through conversions and use different attribution windows.

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