What is ROAS?
ROAS (Return on Ad Spend) measures the revenue generated for every dollar spent on advertising. It is a key performance metric for evaluating campaign profitability.
ROAS Formula
ROAS = Revenue from Ads / Ad Spend
For example, if you generate $5,000 in revenue from $1,000 in ad spend, your ROAS is $5,000 / $1,000 = 5:1 (500%).
What is a good ROAS?
- 4:1+ (400%+): Strong performance — most industries aim for this benchmark
- 3:1 (300%): Average — acceptable for many campaigns
- Below 2:1 (200%): May need optimization — consider margins carefully
ROAS vs ROI
ROAS measures gross revenue against ad spend only, while ROI (Return on Investment) factors in all costs (production, overhead, shipping). ROAS is more common in media buying; ROI gives a fuller business picture.