MetricsPaid Media
What Is ROAS? Complete Guide
ROAS (Return on Ad Spend) measures how much revenue you generate for every euro invested in advertising. Learn how to calculate and optimize it.
Definition
ROAS (Return on Ad Spend) measures the return on advertising investment. It's calculated by dividing the revenue generated by the advertising cost.
Formula: ROAS = Advertising revenue / Advertising cost
Practical example
If you invest €1,000 in Google Ads and generate €4,000 in attributed sales, your ROAS is 4x (or 400%).
What's a good ROAS?
It depends on your industry and margins:
- Ecommerce: A ROAS of 3-4x is usually the minimum viable, depending on your product margins.
- SaaS: Direct ROAS can be low (1-2x) but customer LTV makes up for it.
- Lead generation: Better measured with CAC than direct ROAS.
ROAS vs ROI
They're not the same. ROAS only measures return on advertising spend. ROI includes all costs (team, tools, agency, etc.).
A 4x ROAS can become a negative ROI if your operational costs are high.
How to improve your ROAS
- Improve your tracking: If you don't measure correctly, you can't optimize
- Segment better: Show the right ad to the right person
- Optimize landing pages: More conversions = better ROAS
- Work on your LTV: A repeat customer improves your long-term ROAS