What ROAS is
ROAS stands for Return On Ad Spend. It shows how many euros of revenue each euro invested in a campaign, a channel or advertising as a whole generates.
It is the metric used to manage Google Ads, Meta Ads or Amazon Ads campaigns day to day in ecommerce, because it relates what you spend to what you sell.
How it is calculated
The formula is simple: ROAS = revenue attributed to advertising / ad spend. If a campaign cost 1,000 euros and generated 5,000 euros in sales, the ROAS is 5 (or 500%).
The hard part isn't the division but the numerator: which sales are attributed to each campaign. Each platform counts its own with its own attribution model and conversion windows, so the sum of what Google and Meta report almost always exceeds the shop's real sales.
- Use the same attribution window when comparing channels.
- Check each platform's ROAS against the shop's real sales.
- Separate brand and non-brand campaigns: brand campaigns inflate ROAS.
- Also calculate overall ROAS: total sales / total spend.
What ROAS is profitable
There is no universally good ROAS: it depends on your margin. The key figure is break-even ROAS, the one that leaves the campaign at zero: break-even ROAS = 1 / margin.
If your margin, after product cost, shipping, fees and returns, is 40%, your break-even ROAS is 2.5. Below that, every sale from that campaign loses money. With a 25% margin, break-even rises to 4.
That is why two shops with the same ROAS can have opposite results. Before setting ROAS targets, calculate your real margin by product or category.
How to improve ROAS
ROAS improves in two ways: investing better or converting better. Both count. At Beter, working on the Amazon account, ROAS went from 6.7 to 12 with the same spend.
- Allocate budget by margin, not just by sales.
- Clean up search terms and audiences that spend without converting.
- Improve the product feed: titles, images and attributes.
- Work on the product page and checkout: raising conversion raises the ROAS of every campaign at once.
- Run remarketing and campaigns aimed at customers with a high likelihood of buying again.
The limits of ROAS
ROAS measures revenue, not profit. A campaign with a good ROAS on low-margin products can earn less than another with a lower ROAS on high-margin products. Some brands use POAS (profit on ad spend) to correct for this.
Nor does it measure long-term value: a new customer who buys again five times is worth more than the ROAS of their first purchase. And it doesn't distinguish the sales that would have come anyway without ads. That is why it should be read alongside acquisition cost, customer value and incrementality tests.
Frequently asked questions
What is the difference between ROAS and ROI?
ROAS divides revenue by ad spend. ROI takes profit into account: it subtracts all costs, not just advertising. A high ROAS doesn't guarantee a positive ROI.
Is a ROAS of 3 good?
It depends on your margin. With a 40% margin, a ROAS of 3 is profitable because it beats the break-even of 2.5. With a 25% margin, break-even is 4 and a ROAS of 3 loses money.
Why do Google and Meta add up to more sales than my shop made?
Because each platform attributes sales with its own model and its own windows. The same sale can be counted in both. That is why it is worth checking against real sales and looking at overall ROAS.
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Founder and Chairman of Webimpacto. He drives the adoption of AI across the agency and its clients’ projects: GEO, agentic commerce and new channels such as ChatGPT Ads.