Skip to main content
Start for FreeBook a demo

Return on ad spend

What is ROAS (return on ad spend)?

ROAS (return on ad spend) is the revenue an ad campaign brings in for every dollar spent on it: revenue from ads divided by ad spend.

Formula

ROAS = revenue from ads ÷ ad spend

Spend $1,250 on Meta ads that bring in $5,000 of orders and your ROAS is 4.0, often written 4:1 or 400%. Every dollar of ads returned four dollars of revenue.

Work out yours with the ROAS calculator.

A real store example

Graza Starter Kit page: over 70 Meta ads linked here.

Graza sends these ads to one bundle: the Sizzle and Drizzle duo, two refill cans and a free funnel, a $74 value for $49. A bundle raises what each click can buy, which is the side of ROAS the page controls.

Open the pageSee their ads

How to improve ROAS on your store

  1. Send each ad to a page made for it

    A page that repeats the ad's headline and offer keeps the promise the click was made on, so more of those paid visitors buy.

  2. Sell more per click

    Bundles, kits and volume tiers raise order value, and ROAS rises with it at the same ad spend.

  3. Judge ROAS against your margin

    Break-even ROAS is 1 divided by gross margin. Cut campaigns below it, not campaigns below someone else's number.

Ask Replo: "email me ROAS by campaign every morning".

Report my ROAS

ROAS questions

What is a good ROAS?
A good ROAS is one above your break-even ROAS, which is 1 divided by your gross margin. At a 50% margin you break even at 2.0; at 25% you need 4.0. One target for every store hides that difference.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend only. ROI compares profit with every cost, including product, shipping and fees. A campaign can show a strong ROAS and still lose money once those costs come out.
How do you calculate ROAS as a percentage?
Multiply ROAS by 100. A ROAS of 3.5 is 350%, meaning each dollar of ad spend returned $3.50 in revenue. Ad platforms use both forms, so check which one a report shows.

Related terms

Browse the glossary

MER

MER (marketing efficiency ratio) is total store revenue divided by total marketing spend, across every channel.

CPA

CPA (cost per acquisition) is the ad spend it takes to win one conversion, such as a purchase or signup: ad spend divided by conversions.

AOV

AOV (average order value) is the average amount a customer spends per order: revenue divided by number of orders.

Conversion rate

Conversion rate is the share of visitors who complete a goal, usually a purchase: conversions divided by sessions.

CAC

CAC (customer acquisition cost) is the total sales and marketing spend it takes to win one new customer.

Keep reading