ROAS (Return on Ad Spend)
ROAS (return on ad spend) is the revenue generated for every dollar spent on advertising, calculated as revenue divided by ad spend.
ROAS (return on ad spend) is the revenue generated for every dollar spent on advertising, calculated as revenue ÷ ad spend. A campaign that earns $4,000 on $1,000 of spend has a ROAS of 4, often written as 4:1 or 400%.
ROAS is the headline profitability metric for revenue-driven campaigns. Unlike cost metrics that look at what you pay, ROAS looks at what you get back, making it the cleanest single number for judging whether a campaign is worth running and scaling.
How it works#
ROAS is shaped by three levers: how many clicks convert (Conversion Rate (CVR)), how much each conversion is worth (AOV (Average Order Value)), and what you pay for traffic. Raising AOV or CVR lifts ROAS without increasing spend; rising click costs drag it down.
Break-even and a "good" ROAS#
There's no universal target. The break-even ROAS depends on your margins: a business with a 25% profit margin needs roughly a 4:1 ROAS just to cover costs, while a high-margin digital product might thrive at 2:1. That's why ROAS is read alongside CPA (Cost Per Acquisition) and margin, not in isolation.
ROAS is closely related to ROI; the difference is that ROAS measures revenue against ad spend only, while ROI accounts for total costs and profit.
Related terms: CPA (Cost Per Acquisition), AOV (Average Order Value), and Ad Spend.
