Return on ad spend (ROAS)

What is return on ad spend (ROAS)?

Return on ad spend (ROAS) measures how much revenue an advertising campaign generates for every euro, dollar or other unit of currency spent on it. It is calculated as:

ROAS = revenue from ads ÷ ad spend

For example, a campaign that costs €1,000 and generates €5,000 in revenue has a ROAS of 5 (often written as 5:1 or 500%).

ROAS is not the same as profit. It is based on revenue and ignores product costs, shipping and other expenses. To find out whether a campaign is profitable, calculate your break-even ROAS: 1 ÷ profit margin. With a 25% margin, you need a ROAS of at least 4 just to cover costs. Return on investment (ROI), by contrast, compares profit with total costs.

ROAS is also used as a target in automated bidding, such as the “target ROAS” strategy in Google Ads and in Performance Max campaigns. This requires reliable conversion tracking with transaction values, for example via Google Analytics 4 or the platform’s own tag.

In international campaigns, compare ROAS per market rather than for the account as a whole, and account for currencies, taxes and different margins. A market with a lower ROAS can still be worth investing in if it is growing or strategically important.