Revenue generated for every unit of currency spent on advertising.
Return On Ad Spend is total revenue attributed to advertising divided by the ad spend that produced it, usually written as a ratio like 4:1 or a percentage. A ROAS of 4 means four in revenue for every one spent. It is the headline efficiency metric for most paid campaigns.
Crucially, ROAS is a revenue measure, not a profit measure. It ignores product costs, fulfilment, and overheads, so a campaign can hit a strong ROAS and still lose money. It also depends entirely on the attribution model behind the revenue figure.
ROAS lets you compare campaigns, channels and audiences on a like-for-like efficiency basis and is the natural target for automated bidding. Your break-even ROAS depends on your margins, so a target that works for one business fails for another.
Treating ROAS as profit, ignoring the attribution window that inflates or deflates it, and optimising to ROAS while cannibalising sales you would have won anyway. Pair it with margin and customer lifetime value for a real picture.
Common questions
Straight answers on how this fits your marketing and build.
It depends on your margins. A business with thin margins may need a ROAS of 5 or more to profit, while a high-margin one can thrive at 2. Calculate your break-even ROAS before setting a target.
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