Return on ad spend — as a ratio, a percentage, and dollars of revenue per $1 spent. Add a margin to see whether the campaign is actually profitable.
Divide the revenue you attribute to a campaign by what you spent on it. A ROAS of 5× means every $1 of ad spend returned $5 of revenue. Multiply by 100 to express it as a percentage (500%).
You spent $2,000 on a campaign that drove $9,000 in revenue. ROAS = 9,000 ÷ 2,000 = 4.5× (450%). If your gross margin is 40%, profit on ad spend = (9,000 × 0.40) − 2,000 = $1,600, and your POAS (profit-based ROAS) is 1.8×.
The often-quoted benchmark is 4:1, but it's only meaningful next to your margins. The number that tells you whether you're profitable is your break-even ROAS — the point where revenue exactly covers product cost and ad spend. Beat it and you profit; fall below it and you lose money even on a "good-looking" ROAS. That's why this calculator also shows profit on ad spend when you enter a margin.
ROAS measures revenue against ad spend only. Marketing ROI measures profit against total cost. Use ROAS for quick campaign comparisons and ROI when you need the true bottom-line return.
How is ROAS calculated? Revenue attributable to ads divided by ad spend.
What's a good ROAS? Above your break-even ROAS (1 ÷ gross margin). 4:1 is a common target but margin-dependent.
Is a higher ROAS always better? Not necessarily — a very high ROAS can mean you're under-spending and leaving profitable growth on the table.
