ROAS (return on ad spend)
ROAS, return on ad spend, is the revenue attributed to ads divided by what those ads cost. A ROAS of 3 means $3 of attributed revenue for every $1 spent. It measures revenue, not profit, so the number you need to beat is your break-even ROAS, which is 1 divided by your gross margin.
Updated
Formula and example
ROAS = attributed revenue ÷ ad spend.
Example: $9,000 of attributed revenue from $3,000 of spend is a ROAS of 3.0, sometimes written 300%.
Break-even ROAS
Break-even ROAS = 1 ÷ gross margin. At a 40% margin it is 2.5: you need $2.50 of revenue per $1 of spend just to cover product costs and the ads. At a 70% margin it is about 1.43.
This is why two businesses can look at the same ROAS and reach opposite conclusions. A 2.0 ROAS is profitable at 70% margin and loses money at 40%.
| Gross margin | Break-even ROAS |
|---|---|
| 30% | 3.33 |
| 40% | 2.50 |
| 50% | 2.00 |
| 70% | 1.43 |
Limits of ROAS
- Attributed revenue depends on the platform's attribution window and tracking.
- Retargeting campaigns often show high ROAS partly because they reach people who would have bought anyway. See incrementality.
- ROAS ignores repeat purchases unless you measure value over time.
How the platforms define it
Google Ads uses ROAS as a bid target: target ROAS is the average conversion value, such as revenue, you want for each dollar spent. Google's example is $5 in sales for every $1 of spend, a 500% target ROAS ($5 ÷ $1 × 100%).
Note the units: Google expresses ROAS as a percentage, while many teams write the same figure as a ratio (5.0 or 5x).
Questions
- What is a good ROAS?
- Any ROAS above your break-even ROAS is profitable on the attributed sale. Break-even ROAS is 1 divided by your gross margin, so it differs by business.
- Is ROAS the same as ROI?
- No. ROAS compares revenue to ad spend only. ROI compares profit to the total investment, including product costs and other expenses.
Sources
Read on 27 October 2026. Platforms change specs and policies without notice; check the source before you build to a number.