What Is ROAS in Advertising?

Return on Ad Spend (ROAS) is one of the most important metrics in marketing. It tells you how much revenue your ads generate compared to what you spend. Whether you are running Facebook Ads, Google Ads, or any other campaign, ROAS shows if your investment is paying off.

How ROAS is calculated

The formula for ROAS is simple:

ROAS = Revenue from Ads ÷ Cost of Ads

For example, if you spend $1,000 on ads and generate $5,000 in sales, your ROAS is 5:1 (or simply 5). This means that for every dollar you spent, you earned five dollars in revenue.

Why ROAS matters

ROAS is more than just a number — it is a measure of your ad efficiency. A high ROAS means your campaigns are profitable. A low ROAS means you are spending more than you are making, which signals it is time to adjust your targeting, messaging, or offer.

What is a good ROAS?

A “good” ROAS depends on your industry, profit margins, and business model:

• E-commerce: Many businesses aim for a 4:1 ROAS or higher.
• Service-based businesses: ROAS goals can be lower if customer lifetime value (CLV) is high.
• High-ticket offers: Even a 2:1 ROAS can be profitable if margins are strong.

How to improve ROAS

1. Refine your targeting: Focus your ads on the audience most likely to buy.
2. Test your creatives: High-quality visuals and compelling headlines increase click-through rates.
3. Optimize landing pages: Make it easy for visitors to take the next step.
4. Track and analyze: Use analytics tools to identify winning campaigns and scale them.

The bottom line

ROAS is a clear, straightforward way to measure the effectiveness of your advertising. The higher your ROAS, the more efficiently you are turning ad spend into revenue. Focus on improving targeting, creative, and conversion rates, and your ROAS will follow.

Want to increase your ROAS? Contact us for a campaign audit and performance strategy session.