What Is ROAS (Return on Ad Spend)?
ROAS (Return on Ad Spend) is a marketing metric that measures the revenue generated for every dollar spent on advertising. It’s calculated as revenue from ads divided by the cost of those ads.
Why it matters
ROAS is the clearest measure of paid-campaign profitability. It tells you whether your advertising is actually making money, which campaigns to scale, and which to cut. What counts as a “good” ROAS depends on your margins — a business with slim margins needs a higher ROAS to profit than one with high margins. It’s the north-star metric for most ecommerce and lead-gen ad accounts.
Example
If you spend $1,000 on Google Ads and generate $4,000 in sales, your ROAS is 4:1 (or 400%) — meaning every $1 spent returned $4 in revenue.
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