Return on Ad Spend (ROAS)

A marketing metric that measures the revenue generated for every dollar spent on advertising.

What is ROAS?

Return on Ad Spend (ROAS) is a marketing metric that measures how much revenue you earn for every dollar spent on advertising. It helps evaluate the effectiveness of digital advertising campaigns.

ROAS Formula

ROAS = Revenue from Ads / Cost of Ads

If you spend $1,000 on ads and generate $5,000 in revenue, your ROAS is 5:1 or 500%.

ROAS vs. ROI

ROAS: Revenue divided by ad spend only
ROI: Profit divided by total investment (includes all costs)

What’s a Good ROAS?

A common benchmark is 4:1 ($4 revenue for every $1 spent), but this varies by:

Industry and profit margins
Business model (e-commerce vs. SaaS)
Campaign type (prospecting vs. retargeting)
Customer lifetime value

Improving ROAS

Optimize targeting to reach high-intent audiences, improve ad creative and landing pages, focus budget on best-performing campaigns, and use conversion tracking to measure accurately.

MORE PAID ADVERTISING TERMS

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Cost Per Acquisition (CPA)

The total cost of acquiring one paying customer through a specific campaign or channel.

Cost Per Click (CPC)

The amount an advertiser pays each time a user clicks on their ad.

Pay-Per-Click (PPC)

An advertising model where advertisers pay a fee each time their ad is clicked, buying visits rather than earning them organically.

Quality Score

Google Ads metric that measures the quality and relevance of your keywords, ads, and landing pages on a 1-10 scale.

Remarketing

A strategy that shows targeted ads to people who have previously visited your website or used your app.

Search Engine Marketing (SEM)

A form of digital marketing that promotes websites by increasing visibility in search engine results through paid advertising.

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