ROAS
ROAS is revenue attributed to advertising divided by ad spend, the working efficiency gauge of paid channels.
What ROAS is
ROAS, return on ad spend, is revenue attributed to advertising divided by what the advertising cost: spend 1,000 and drive 4,000 in tracked sales, and ROAS is 4.
Why ROAS matters
It’s the working efficiency gauge of paid channels: which campaigns pay for themselves, which need cutting, where the next unit of budget belongs. Platforms optimize toward it and report it natively, which is also its trap.
Reading ROAS honestly
- It’s revenue-based: margin decides whether a given ROAS profits
- Platform-reported ROAS grades its own homework via attribution
- Breakeven ROAS = 1 ÷ margin; know yours per category
- New-customer ROAS and blended ROAS answer different questions
Frequently asked questions
What’s a good ROAS?
Above your breakeven, which depends on margin: thin-margin stores need a much higher ROAS than fat-margin ones to profit. There’s no universal good number, only good-for-your-economics.
ROAS or CAC: which should guide spend?
Both, for different horizons: ROAS grades short-term campaign efficiency, CAC against lifetime value grades whether growth is sustainable. Scaling on ROAS alone can buy cheap revenue from customers who never return.