ROAS (Return on Ad Spend)
ROAS (return on ad spend) measures revenue generated per dollar of advertising spend. A 4x ROAS means four dollars of revenue for every dollar spent.
ROAS, or return on ad spend, measures the revenue generated for every dollar spent on advertising. A campaign that produces four dollars of revenue per dollar of spend has a 4x (or 400 percent) ROAS.
How it works
ROAS is calculated as attributed revenue divided by ad spend, at the campaign, channel, or account level. The number is only as honest as its attribution: platform-reported ROAS often takes credit for sales that would have happened anyway, which is why mature programs pair platform ROAS with blended measures and incrementality testing. Target ROAS also varies by margin; a 4x ROAS on thin margins can lose money while 2.5x on high margins prints it.
Why it matters
ROAS is the fastest read on paid media efficiency, but chasing the highest ROAS usually means shrinking to only the easiest conversions. The commercial goal is maximum profitable volume, not the prettiest ratio. Learn more about our performance marketing agency.
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