ROAS (Return on Ad Spend)
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ROAS is the revenue earned for every dollar spent on advertising, expressed as a multiple (4x means $4 back per $1 spent).
ROAS is the single most-used efficiency metric in paid advertising. It answers one question: for every dollar I put into ads, how many dollars of revenue came back?
A ROAS of 3x means the campaign generated $3 of revenue for every $1 of ad spend. That sounds profitable, but whether it actually is depends on your margins — a 3x ROAS on a 30% margin product barely breaks even.
ROAS is useful because it's simple and comparable across channels. Its weakness is that it ignores product cost, fees and overhead. For a fuller picture, pair it with POAS (profit on ad spend) or break-even ROAS.
Formula
ROAS = Revenue from ads ÷ Ad spend
Example
Related terms
POAS
POAS is the gross profit generated for every dollar of ad spend, giving a more accurate profitability measure than ROAS.
Break-Even ROAS
Break-even ROAS is the minimum ROAS needed to cover product costs and fees — anything above it is profit on the contribution margin.
CPA
CPA is the average advertising cost to acquire one customer or conversion, calculated as total ad spend divided by total conversions.
MER
MER is total revenue divided by total marketing spend across all channels, giving a blended view of marketing efficiency.
AOV
AOV is the average dollar amount spent per order, calculated as total revenue divided by total number of orders.