ROAS

ROAS (Return on Ad Spend) is an advertising efficiency metric that shows how much revenue each unit of currency invested in a campaign returns. It is one of the most important KPIs in performance marketing, especially in e-commerce, where every amount spent can be tied to a specific sale.

How ROAS is calculated

The formula is simple:

ROAS = campaign revenue / campaign cost

If you spent 2,000 on advertising that generated 8,000 in revenue, your ROAS is 4 — that is, 400%. It means every unit spent returned fourfold in revenue. The result is expressed as a ratio (4:1), a multiple (4x) or a percentage (400%).

Bear in mind that ROAS works on revenue, not profit. A high ROAS on a thin margin does not necessarily mean the campaign is profitable — to judge that, you must factor in margin and operating costs.

ROAS in practice

ROAS is the core metric for evaluating campaigns in Google Ads and Meta Ads. Marketers use it to:

• optimise budget — shifting spend toward campaigns and ad groups with the highest ROAS,
• set profitability thresholds in automated bidding (target ROAS),
• compare the returns of different channels and products.

For ROAS to be trustworthy, you need accurate conversion tracking with transaction values attached — without it the figure is only an estimate. In analysis it is wise to pair ROAS with cost per acquisition and margin, so you can tell campaigns that drive turnover apart from those that actually build profit.