Return on Ad Spend (ROAS)
Revenue generated for every dollar spent on ads.
Definition
Return on Ad Spend (ROAS) measures the revenue generated for each dollar of advertising spend. A ROAS of 4:1 means you earn $4 in revenue for every $1 spent. ROAS is crucial for ecommerce and any business tracking revenue directly from ads.
ROAS = Revenue from Ads / Ad Spend
Industry Benchmarks
Minimum viable ROAS depends on margins. 3:1 to 4:1 is typical target for ecommerce.
Minimum viable ROAS depends on margins. 3:1 to 4:1 is typical target for ecommerce.
Practical Tips
- Calculate your break-even ROAS based on profit margins
- ROAS doesn't account for profit—a $100 sale with $90 COGS needs high ROAS
- New customer ROAS can be lower if LTV is high
- Use Target ROAS bidding once you have conversion data
Related Terms
Want help applying this in your campaigns?
Book a 1:1 coaching session and we'll work through your actual account together.
Book a session ($199)