What is ROAS?
Return on ad spend: revenue earned for every euro spent on ads. The measure that matters for a store; for a service business, cost per lead usually says more.
Return on ad spend is the revenue your ads brought in, divided by what you spent on them. Spend €1,000 and make €4,000 in sales from it, and your ROAS is four, often written as 4:1 or 400%.
It is the natural measure for an online shop, where every sale has a value the ad platform can see. It tells you, campaign by campaign, which ads are earning their keep.
It has two limits worth knowing. First, it measures revenue, not profit. A product with thin margins can have a healthy-looking ROAS and still lose money on every sale, so the target has to be set against margin, not taken from a rule of thumb. Second, for a service business, where the ad produces an enquiry rather than a sale, ROAS is hard to measure honestly. There, the cost to win a lead or a customer usually tells you more. We compare the platforms on this in Google Ads versus Facebook ads.
Paid media measured on what it returns, not what it spends.
Google, Meta, LinkedIn and TikTok campaigns built on search terms, creative testing and conversion tracking, not impressions.