Return on Ad Spend
Return on Ad Spend (ROAS) measures how much revenue an advertising campaign generates for each unit of money spent on ads. It is calculated by dividing the revenue attributed to a campaign by its ad cost, often shown as a ratio such as 4:1 or as a percentage, to gauge advertising efficiency.
ROAS is widely used to compare ad campaigns, channels, and creatives, and to decide where to scale or cut budget. Because it is revenue-based rather than profit-based, a healthy target depends on margins: a business with thin margins needs a much higher ROAS to actually profit.
A common pitfall is confusing ROAS with overall profitability, it ignores product costs, fulfillment, and non-ad marketing expenses. It is narrower than Return on Marketing Investment and relates inversely to Cost Per Acquisition.
Last updated: 14 June 2026