ROAS measures how much revenue each ad dollar brings back, as the ad platform sees it.
How to calculate ROAS
ROAS = revenue from ads ÷ ad spend
Spend $10,000, get $30,000 in attributed revenue, and ROAS is 3.0x (also written 300% or 3:1). It also equals AOV ÷ cost per purchase.
What's a good ROAS?
It depends on your margin. Break-even ROAS = 1 ÷ margin. At a 50% margin you break even at 2.0x. At 30% you need 3.33x. A 2.5x makes money for one brand and loses it for another.
ROAS counts revenue, not profit, and only what the platform can track. Retail and Amazon sales are invisible to it. That's why we leave ROAS out of our benchmarks.
Work yours out: ROAS calculator and what is a good ROAS.
Related: MER, attribution window, incrementality.
