Metrics

ROAS

Return on Ad Spend

In short

ROAS (Return on Ad Spend) measures how much revenue every dollar or euro spent on ads brings in. It is calculated as ad revenue divided by ad spend.

Also known as: Return on Ad Spend

ROAS (Return on Ad Spend) tells you how much revenue you generate for every unit of currency you spend on ads. It is the key success metric for revenue-focused campaigns, especially in ecommerce.

How is ROAS calculated?

The formula is simple:

ROAS = revenue from ads / ad spend

ROAS is often shown as a percentage too: a ROAS of 4 equals 400 percent.

Example

You spend 2,000 euros a month on Meta ads. Those ads bring in 40 orders with an average order value of 150 euros, so 6,000 euros in revenue.

ROAS = 6,000 € / 2,000 € = 3

Every euro you invest returns 3 euros in revenue. Whether that is profitable depends on your margin. With a 40 percent gross margin, your break-even ROAS is 2.5 (1 divided by 0.4), so at 3 you are in the black.

Why does ROAS matter?

ROAS helps you move budget to where it earns the most revenue. Ad platforms also use it for bid strategies such as "Target ROAS" in Google Ads or value optimization on Meta.

For that to work, two things have to be right:

  1. Conversions have to arrive. Signal loss from ad blockers or Safari ITP pushes your measured ROAS down artificially.
  2. Conversion values have to be sent. Without a value and currency per event, the platform cannot calculate ROAS at all.

For lead generation, ROAS is often less meaningful because revenue only happens later in sales. There, CPA is usually the better metric to steer by. Either way, solid attribution is the prerequisite.

ROAS with LeadSignal

LeadSignal lets you attach a conversion value and currency to every event, for example a fixed value per lead or the order value via the JS API. These values go to Meta, Google Ads, LinkedIn and TikTok, so the platforms can calculate your ROAS and optimize for value. For Meta, events are also sent server-side through the Conversions API, which makes the data more robust.

If you want to measure ROAS on real revenue from your CRM, including deals that close weeks after the lead, our sister product LeadMetrics is the right fit. To get started, simple tracking with clean values per event often goes a long way, see pricing.

Frequently asked questions

What is a good ROAS?+

It depends on your margin. A ROAS of 4 is often considered solid, but with thin margins you may need 6 to be profitable. Work out your break-even ROAS: 1 divided by your gross margin.

What is the difference between ROAS and ROI?+

ROAS compares revenue to ad spend. ROI takes all costs into account, including product, staff and tools, and looks at profit. A high ROAS does not automatically mean a positive ROI.

Why is the ROAS in my ad account lower than reality?+

Often conversions are missing from your ad account because ad blockers, cookie restrictions or missing consent break tracking. Server-side tracking and hashed customer data can reduce that loss.

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Related terms

MetricsCPACost per AcquisitionCPA (Cost per Acquisition) tells you what a single conversion such as a lead or sale costs you on average. It is calculated as ad spend divided by conversions.MetricsAttributionAssigning conversions to marketing channelsAttribution assigns a conversion to the marketing touchpoints that led to it, so you can see which channels and campaigns actually drive results for you.TrackingConversion TrackingConversion tracking measures which visitors complete a valuable action after clicking an ad, such as a purchase or lead, and reports it back to the ad platform.MetricsSignal LossSignal loss describes conversions and user data that never reach ad platforms because of ad blockers, cookie limits, missing consent or broken tracking setups.TrackingUTM ParametersUrchin Tracking Module parametersUTM parameters are tags added to a URL that describe the source, medium and campaign of a visit, so you can see which channel brings in visitors and leads.