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Glossary

Return on ad spend (ROAS)

Return on ad spend (ROAS) is the revenue your ads generate for every euro you spend on them.

By Berend Vrakking, founder of Product Metrics. Updated 7 October 2026.

Formula

ROAS = revenue from ads ÷ ad spend

Revenue means conversion value. Write it as 4, 4:1 or 400%: all three mean €4.00 of revenue for every €1.00 spent.

Example

One month of ads
StepValue
Ad spend€2,000.00
Revenue from ads€8,000.00
ROAS (€8,000.00 ÷ €2,000.00)4

A ROAS of 4 means every €1.00 of ad spend brought back €4.00 of revenue. Revenue, mind, before a single product has been paid for. Illustrative data.

For one product, and for an account

Per product, ROAS is that product’s conversion value divided by its own ad cost. The account figure mixes products with different margins, so a healthy average can be carried by one product while another loses money.

ROAS counts revenue, and revenue still has the product cost in it. A product with a 25% margin breaks even at a ROAS of 4 (1 ÷ 0.25), and a product with a 50% margin at 2 (1 ÷ 0.50). The same ROAS of 4 only covers the costs of the first product and earns a profit on the second.

Common mistake

Judging ROAS against a general benchmark instead of the product’s own break-even. A benchmark ignores margin, returns and shipping.

Questions

What is a good ROAS?

A good ROAS is one above the product’s own break-even ROAS, which is 1 ÷ its margin. A product with a 25% margin needs more than 4 to earn a profit, and a product with a 50% margin needs more than 2. A shop-wide target is a compromise between lines like these.

What is the difference between ROAS and ROI?

ROAS divides revenue by ad spend, so it ignores what the products cost. ROI divides the profit left after costs and ad spend by the ad spend. A ROAS of 4 can still be a poor return when the margin is thin.

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