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ROAS (Return on Ad Spend)
ROAS (Return on Ad Spend) is the revenue generated for every unit of currency spent on advertising, calculated as attributed revenue divided by ad spend. It's expressed as a ratio (4:1) or multiple (4x). Unlike ROI, it measures gross revenue return and ignores margin, COGS, and other costs.
Formula
Worked example
A mid-size fashion e-commerce brand runs a 30-day paid social campaign with €18,000 spend. The platform's attribution model (7-day click, 1-day view) credits €63,000 in revenue to the campaign. ROAS = 63,000 / 18,000 = 3.5, meaning every €1 of spend returned €3.50 in revenue, a figure the planner now checks against product margin before calling the campaign profitable.
How it is used
Planners use ROAS to rank campaigns, ad sets, or channels within a single attribution model, and to set automated bid targets (target ROAS bidding). The mistake practitioners make is treating a high ROAS as proof of profitability: on a product with 25% margin, a 3.5x ROAS still loses money once COGS, shipping, and returns are subtracted. ROAS also shifts mechanically with the attribution window and click/view crediting rules, so a 4x from one platform is not the same measurement as a 4x from another.
The common mistake
Don't read ROAS as profit margin; convert it to break-even ROAS (1 / product margin) before judging whether a campaign is actually profitable.