Contents
- ROAS relates revenue generated to ad spend, over the same period and the same attribution window.
- A ROAS of 4 means €4 of revenue for €1 spent, before margin and before fixed costs.
- The break-even threshold depends on gross margin: at 30% margin, you need a ROAS above 3.3 to avoid losing money.
Definition
ROAS, return on ad spend, measures the revenue generated by each unit of currency invested in advertising.
Formula
ROAS = conversion value divided by ad cost. The result is expressed as a ratio, sometimes as a percentage.
Worked example
A campaign spends €2,000 over a month and generates €8,400 of attributed revenue. ROAS is 4.2. At a gross margin of 35%, the campaign brings in €2,940 of margin for €2,000 invested, a contribution of €940.
Orders of magnitude
In e-commerce, a ROAS between 3 and 5 is common on brand campaigns, between 1.5 and 3 on cold acquisition. It depends directly on the site's conversion rate. These ranges vary widely by sector and average order value: treat them as landmarks, not targets.
The most common mistakes
- Comparing ROAS across platforms. Meta attributes on 7 days after click and 1 day after view, Google Ads on a different window: the two figures do not measure the same thing. That is the subject of our piece on what cannot be compared between Meta Ads and Google Ads.
- Confusing ROAS with profitability. A ROAS of 3 is excellent at 60% margin, ruinous at 20%.
- Steering a whole account on average ROAS. It aggregates highly profitable brand campaigns with less profitable acquisition, and hides both.
Where to find the metric
In Google Ads, the Conv. value / cost column, available at campaign as well as keyword level. In Meta, the Purchase ROAS column, among the conversion results. In GA4, Advertising ROAS, in the acquisition reports, calculated on cost imported from the linked platforms.
Frequently asked questions
The Adwise team connects Google Ads, Meta Ads, LinkedIn Ads, GA4 and Search Console so agencies and freelancers can run their campaigns from a single place.
