What Does ROAS Stand For?
ROAS stands for Return on Ad Spend. It's pronounced as "ROW-as" or simply spelled out as "R-O-A-S".
Also known as: Advertising Revenue Ratio, Ad Return Ratio
ROAS Definition Explained
At its core, ROAS tells you how much revenue you generate for each dollar you spend on advertising.
Revenue-Based Metric
ROAS measures top-line revenue, not profit. It tells you how much money comes back from your ads.
Expressed as Ratio or Percentage
A ROAS of 5× (or 5:1) means you earn $5 for every $1 spent. This can also be written as 500%.
Campaign-Level Measurement
You can calculate ROAS for individual ads, ad groups, campaigns, or your entire advertising spend.
For a deeper dive into the formula, see our ROAS Formula Guide →
Why is ROAS Important?
ROAS is one of the most important metrics for digital marketers and business owners. Here's why:
Measure Ad Effectiveness
Know instantly whether your advertising is generating positive returns or losing money.
Optimize Budget Allocation
Identify which campaigns, channels, or ads perform best and allocate budget accordingly.
Make Profitability Decisions
Determine if your advertising can sustain profitability given your business margins.
Benchmark Performance
Compare your results against industry standards and your own historical performance.
ROAS vs ROI: What's the Difference?
ROAS and ROI are related but measure different things:
ROAS
Focus: Revenue from ads vs ad spend
Revenue ÷ Ad Spend
Example: $10K revenue ÷ $2K spend = 5×
ROI
Focus: Profit vs total investment
(Profit - Cost) ÷ Cost × 100%
Example: ($3K profit - $2K cost) ÷ $2K = 50%
Key Difference: ROAS measures revenue efficiency. ROI measures overall profitability including all costs.
For a detailed comparison, see our ROAS vs ROI Guide →
What is a Good ROAS?
A "good" ROAS depends on your business, but here are general benchmarks:
| ROAS Range | Meaning | Status |
|---|---|---|
| Below 1× | Losing money on ads | ❌ |
| 1× - 2× | Break-even zone | ⚠️ |
| 2× - 4× | Healthy performance | ✓ |
| Above 4× | Excellent returns | ⭐ |
Your ideal ROAS depends on your profit margins. A 50% margin business breaks even at 2× ROAS.
How to Calculate ROAS
Calculating ROAS is straightforward:
ROAS = Revenue from Ads ÷ Ad SpendExample
You spent $2,000 on Facebook Ads and generated $8,000 in sales.
$8,000 ÷ $2,000 = 4.0× ROAS
Every $1 spent on ads generated $4 in revenue.
Try our free calculator below:
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Enter your numbers below
Your ROAS
For every $1 spent, you earn 5 in revenue.
Want step-by-step instructions? Check our How to Calculate ROAS →
ROAS in Different Platforms
Different advertising platforms report ROAS slightly differently:
Google Ads
Conv. value / costCalled "Conversion value per cost" or target ROAS bidding
Meta/Facebook Ads
Purchase ROASCalculated from tracked purchase events in Events Manager
Amazon Ads
ROAS (or 1/ACOS)Amazon uses ACOS (Advertising Cost of Sales), which is the inverse of ROAS
Frequently Asked Questions
Related Resources
ROAS Formula Guide
Deep dive into the ROAS formula and its variations
How to Calculate ROAS
Step-by-step calculation tutorial
ROAS vs ROI
Detailed comparison of these metrics
ROAS Calculator
Calculate your ROAS instantly
Break-even ROAS Calculator
Find your minimum profitable ROAS