ROAS
return on ad spendROAS (return on ad spend) tells you how many euros of revenue one euro spent on advertising generates. It is calculated by dividing ad-attributed revenue by ad spend. A ROAS of 4.0 means every ad euro brought in four euros of revenue.
Good to know
ROAS only measures the immediate return of advertising. It ignores margins, returns and customer lifetime value. For overall profitability, use ROI or ROMI instead.
FORMULA
How ROAS is calculated
ROAS is ad-attributed revenue divided by ad spend. It tells you how many euros of revenue each ad euro produced.
ROAS = ad revenue ÷ ad spend
The result is expressed as a multiplier (4.0) or a percentage (400 %). Both mean the same thing.
EXAMPLE
Every ad euro produced four euros of revenue. That still says nothing about whether any margin was left.
THE NUMBER THAT MATTERS
Break-even decides, not ROAS
A ROAS of 4.0 is a good number at a 25 % margin and a loss at a 20 % margin. Break-even is derived from your margin: divide one by the margin ratio. Any campaign below that line generates revenue while losing money.
| Margin | Break-even ROAS | Target with profit left |
|---|---|---|
| 20 % | 5.0 | 6.5–8.0 |
| 30 % | 3.3 | 4.5–5.5 |
| 45 % | 2.2 | 3.0–3.8 |
| 60 % | 1.7 | 2.2–2.8 |
The table assumes ad spend is the only variable cost. If shipping or returns are included, the break-even line rises.
PITFALLS
Four ways to misread ROAS
The platform number is not the till number
Meta and Google measure revenue with their own attribution models and often both claim the same sale. Always compare against your own store report.
Brand search inflates the number
Searches for your own name always convert well. If they sit in the same campaign as prospecting, ROAS looks better than it is.
Returns are not deducted
In fashion e-commerce the return rate can be 30 %. A reported ROAS of 4.0 is then really 2.8.
Only the first purchase is counted
If customers buy again, your break-even is lower than it looks. The right metric then is customer lifetime value, not a single campaign.
WHEN ROAS TELLS YOU NOTHING
Three situations where we use a different metric
ROAS works when the sale happens online and its value is known. In other cases it misleads.
Long sales cycle
In B2B the deal closes months after the ad. Measure CPA and lead quality instead.
Sales happen in-store
Online ads can bring customers to a physical store. Measure store visits and total sales.
The goal is awareness
When launching a new product, measure reach and growth in branded search, not immediate sales.
FREQUENTLY ASKED
Frequently asked questions
What is a good ROAS?+
A good ROAS is your own break-even multiplied by 1.3–1.6. There is no universal good number, because it depends on your margin.
What is the difference between ROAS and ROI?+
ROAS measures revenue against ad spend. ROI measures profit against all costs, including production and salaries.
Why does ROAS drop when I raise the budget?+
The first euros go to the audience most likely to convert. As budget grows, ads reach colder audiences and the return per euro falls.
Can ROAS be too high?+
Yes. A ROAS of 15 usually means the budget is too small. Spending more grows total margin even though the multiplier falls.
FOR YOUR BUSINESS
Want your ROAS up, not just defined?
We optimise our clients’ advertising against ROAS targets every week. Get channels and a budget proposal in 30 minutes.
FOR STUDENTS AND NEWCOMERS
Learn the terms, then come and put them to work
The glossary is free study material. Go deeper in our training, and if you want to work in the field, our growing team is looking for people.
Maintained by the VSCY editorial team · Updated 6 Aug 2026 · Part of the marketing glossary (99 terms)
