Return on Ad Spend (ROAS) is the revenue you attributed to a campaign divided by the spend on that campaign over the same period. It tells you whether the ads paid for themselves and how much surplus they generated.
ROAS = Revenue / Ad Spend
Reported as a multiplier (e.g. '3.2×') or as a percentage (e.g. '320%').
Why it matters
ROAS is the bridge between marketing spend and the P&L. A 1× ROAS means you broke even on revenue (not profit) — and most brands need 2.5× to 4× ROAS to be profitable after cost-of-goods, fulfilment and overhead. Knowing your break-even ROAS — the multiplier above which a campaign is creating value, not destroying it — is what separates 'spending on ads' from 'investing in ads.'
Typical ranges (DTC ecommerce)
- Cold-traffic prospecting Meta campaigns: 1.5× – 2.5× is realistic
- Retargeting campaigns: 4× – 8× (warmer audience, higher conversion rates)
- Branded search on Google: 8× – 20× (already-intent traffic)
- Sub-1× ROAS for more than two weeks usually indicates a creative, offer or audience problem, not a bid one
Common misuses
- Comparing ROAS across funnel stages without context — retargeting will always look better than prospecting
- Reporting ROAS in Meta's UI as if it's the truth; iOS 14.5+ and the death of cookies mean Meta's pixel under-reports for most accounts. Cross-check against your store's actual revenue.
- Optimising for high ROAS at the expense of growth — the highest-ROAS campaign is usually the smallest
- Forgetting that ROAS is a revenue metric, not a profit metric. A 3× ROAS on a 30% margin product is a 0.9× return on investment.