What is ROAS?
Return on Ad Spend
Return on Ad Spend (ROAS) is revenue generated per dollar of ad spend. A 4x ROAS means $4 in revenue for every $1 spent.
ROAS = Revenue from ads ÷ Ad spendMeta cold: 1.5-3.5x · Meta retargeting: 5-15x · Google Brand: 8-20x · Google non-brand: 2-5x · Email: 20-40x
- ROAS
- Return on Ad Spend (ROAS) is revenue generated per dollar of ad spend. A 4x ROAS means $4 in revenue for every $1 spent.
Why ROASmatters
ROAS is the most common ad performance metric, but it can mislead. Blended ROAS (across all channels) matters more than single-channel ROAS. A $2 ROAS might be profitable if your margin is 80%. A $5 ROAS might be losing money if margin is 15%.
Worked example
Plug a real number into the formula to see ROASin action:
Numbers are illustrative.Try our Customer LTV Calculatorfor your real numbers.
Common mistakes with ROAS
- 1
Looking at single-channel ROAS in isolation instead of blended MER. Last-click attribution overweights bottom-funnel channels and starves top-of-funnel.
- 2
Setting a uniform target across products with different margins. A 2× ROAS is profitable on 80% margin and unprofitable on 20%.
- 3
Optimizing CAC without measuring LTV. Cheap customers with bad retention destroy unit economics.
How to improve ROAS
Run incrementality tests every quarter to validate which channels actually drive new revenue vs steal credit.
Build a unit economics dashboard separating CAC, LTV, contribution margin, and payback by channel and cohort.
Establish a contribution margin floor for each channel, pause spend when margin drops below threshold for 14 days.
Common questions about ROAS
What is ROAS?▾
How is ROAS calculated?▾
What is a good ROAS benchmark?▾
Why does ROAS matter for marketing teams?▾
Related terms
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