What is ROAS? Return on ad spend explained
ROAS, or return on ad spend, is the revenue your ads bring in for every unit of currency you spend on them. Here is what ROAS means, how to calculate it, a worked example and how to judge whether your number is good.
ROAS, or return on ad spend, measures how much revenue your advertising brings in for each unit of currency you spend on it. You calculate it by dividing ad-attributed revenue by ad spend, so a ROAS of 4 means every AED 1 of ads returned AED 4 in sales. It measures revenue, not profit.
How do you calculate ROAS?
Divide the revenue your ads generated by what you spent on those ads in the same period.
| Version | Formula |
|---|---|
| ROAS as a ratio | Revenue from ads ÷ ad spend |
| ROAS as a percent | Revenue from ads ÷ ad spend × 100 |
Google Ads uses the percent form for bidding. Its Target ROAS help page shows "$5 USD in sales ÷ $1 USD in ad spend x 100% = 500% target ROAS". A ROAS of 5 and a ROAS of 500% are the same thing.
ROAS example
An illustrative UAE fashion store spends AED 20,000 on Meta and Google ads in a month. The platforms attribute AED 70,000 of orders, net of VAT, to those ads.
- ROAS = AED 70,000 ÷ AED 20,000 = 3.5, or 350%.
- Every AED 1 of ad spend brought in AED 3.50 of revenue.
Whether 3.5 is good depends on how much of that AED 3.50 is left after product, delivery, payment fees and returns.
What is a good ROAS?
There is no universal good ROAS, because it depends on your margin. A brand that keeps 60% of each sale after variable costs breaks even at a ROAS of about 1.67, while one that keeps 25% needs 4.0. Work out your break-even ROAS first, then judge every campaign against it. The free break-even ROAS calculator does the math.
ROAS and related metrics
- POAS divides profit, not revenue, by ad spend.
- MER divides total revenue by total marketing spend, with no attribution.
- Target ROAS is the ROAS you ask a bidding algorithm to aim for.
- Your attribution model decides which sales count as coming from ads, so the same spend can show a different ROAS in each platform.
How Grower helps
Grower's channels leaderboard ranks every connected ad channel by ROAS, conversions, cost, CPA, impressions and CTR, and campaign groups show ROAS over time. The attribution engine de-duplicates conversions from every channel and app into one unified conversion count.
Frequently asked questions
Is ROAS the same as ROI?
No. ROAS compares revenue with ad spend only. Marketing ROI compares profit with the full cost of marketing, which can include agency fees, tools and salaries. A campaign can show a ROAS of 3 and still lose money if your margins are thin, which an ROI calculation would reveal.
Should ROAS include VAT?
Calculate it on revenue net of VAT, because VAT is collected for the tax authority, not earned. Many store tags send VAT-inclusive order values to ad platforms, which inflates reported ROAS by the VAT rate. Check what your tags send before you compare platform ROAS with your own break-even line.
Why does each ad platform show a different ROAS?
Each platform credits its own ads using its own attribution model and window, and none de-duplicates against the others. Meta can count a sale after someone only viewed an ad (its attribution windows include view options), while Google Ads counts the same sale after a click, so adding platform ROAS figures overstates results. One de-duplicated conversion count fixes that.
Want to check a campaign now? Use the free ROAS calculator, or book a demo to see ROAS for every connected channel in one leaderboard.