ROAS

Formula

ROAS = Revenue Attributed to Advertising ÷ Advertising Spend

Formula variables

Revenue Attributed to Advertising

Revenue associated with the advertising activity being measured.

Advertising Spend

The advertising cost included in the measurement period.

Worked example

Advertising spend

$10,000

Attributed revenue

$35,000

35,000 ÷ 10,000

Result: 3.5

The measured campaign generated 3.5 units of attributed revenue for every 1 unit of advertising spend. ROAS is often written as 3.5x, or as 350%.

How to interpret it

ROAS describes revenue efficiency, not profit. Whether a given ROAS is good depends on margins. At 3.5, each $1 of spend brings $3.50 of revenue, but if the product's gross margin is 25%, that is about $0.88 of gross profit, less than the $1 spent.

The break-even ROAS is 1 ÷ gross margin (as a decimal): 4.0 at a 25% margin. Read ROAS together with margin, and with metrics such as CAC.

When it is useful

• Comparing the revenue efficiency of campaigns, channels or creatives that share an attribution method.
• Setting a minimum acceptable ROAS from product margins.
• Spotting campaigns that spend budget without producing attributed revenue.

Limitations

• The result depends on the attribution model and lookback window used to assign revenue to ads.
• Revenue is not profit: margins, shipping, refunds and other costs are not reflected.
• Platform-reported ROAS can differ from your own analytics or finance figures.

Common mistakes

• Treating ROAS as ROI. ROI accounts for costs beyond ad spend.
• Comparing ROAS from platforms that use different attribution settings.
• Mixing in non-advertising costs without saying so.

Related KPIs

• ROI
• MER
• CAC
• CPA
• CTR

Related marketing terms

• Attribution
• Attribution Window
• Paid Search
• Paid Social

Related tools