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ROAS (Return On Ad Spend)

Revenue generated per dollar spent on ads

What is ROAS (Return On Ad Spend)?

Total revenue divided by total ad spend. A ROAS of 3x means you made $3 for every $1 spent. Anything below 1x means you're losing money. The north star metric for any paid campaign, if you can't measure it, don't run it.

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In plain words

"Think of it like planting a seed and measuring how much fruit it yields."

How it works

ROAS = Revenue ÷ Ad Spend. Target 3x+

Key takeaways

  • Measures actual return, not just engagement

  • Target 3x+ to stay profitable after overhead

  • Always attribute to the right channel or you'll overcount

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Real-world example

You spend $2,000 promoting a digital course and earn $8,500 in sales. Your ROAS is 4.25x — for every dollar you put in, you got $4.25 back. Below 2x usually means losing money.

Related terms

CPM (Cost Per Mille)

Cost per 1,000 impressions

LTV (Lifetime Value)

Total revenue a customer brings over time

Funnel

The journey from awareness to conversion

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