What is ROAS?
ROAS, or return on ad spend, is the revenue earned for each dollar spent on advertising. To find it, divide the revenue from your ads by the cost of those ads. A result of 4x means $4 of revenue per $1 spent.
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How to calculate ROAS
Divide the revenue from your ads by the cost of those ads.
Why ROAS matters
ROAS tells you how much revenue your advertising produces compared with what it costs. It's easy to calculate and to compare across campaigns, which makes it a popular target for ecommerce and automated bidding.
ROAS is not profit
ROAS looks at revenue, not profit. A 4x ROAS can still lose money if your margins are thin, because the cost of the product, shipping, and other expenses come out of that revenue.
Work out your variable-cost break-even ROAS using contribution margin after all non-ad variable costs and before ad spend. At a 25% contribution margin, you need 4x ROAS to cover those variable costs and ad spend. Fixed overhead and taxes still need funding.
ROAS and ROI
ROI looks at profit against total investment, while ROAS looks only at ad revenue against ad cost. Use ROAS to manage campaigns day to day, and ROI to judge the whole business case.
Disclaimer
This calculator is for informational purposes only, and we don't guarantee the accuracy of its results. You're responsible for verifying any results before relying on them. See our terms of use.
Common questions
What does ROAS stand for?
ROAS stands for return on ad spend. It measures the revenue you generate for each dollar you spend on ads.
How do you calculate ROAS?
Divide ad revenue by ad cost. For example, $20,000 of revenue from $5,000 of ad spend is a 4x ROAS.
What is a good ROAS?
It depends on your margins and goals. A good ROAS is one that is above your break-even point and delivers the profit you need.
Is ROAS expressed as a percentage or a ratio?
Both are used. A ROAS of 4x can also be written as 400%, or as a ratio of 4:1.
How do you improve ROAS?
Raise revenue per click with better offers and landing pages, or lower costs with sharper targeting and negative keywords. Make sure conversion values are tracked accurately.
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