Skip to content
Get in touch

ROAS (return on ad spend)

| Article: 2 min read | Analytics

ROAS (return on ad spend) is the revenue from advertising divided by what you spent on it. A ROAS of 4 (or 400%) means that every hryvnia spent on ads brought in 4 UAH of revenue.

In plain words

ROAS shows how much revenue advertising brings, but not how much profit is left. It is a quick metric for comparing campaigns and channels, for example Google Shopping and Meta.

Google's Ads help describes ROAS as the ratio of conversion value to cost, as a percentage: to set a target, divide the value you want by the cost and multiply by 100. If you want 5 UAH of sales for every 1 UAH of ads, the target ROAS is 500% (Google Ads Help).

Formula

ROAS = revenue from ads ÷ ad spend

Example (made-up numbers)

The numbers are invented for the example. A shoe store spent 50,000 UAH on ads and got 200,000 UAH in revenue.

  • ROAS = 200,000 ÷ 50,000 = 4, or 400%.

The same result can be a loss. If the margin after cost of goods and delivery is 20%, the margin is 40,000 UAH, which is less than the 50,000 UAH spent. Break-even ROAS = 1 ÷ margin: at 20% it is 5, at 35% it is about 2.9.

How different sources see it

Google uses ROAS as the target for automated bidding (Target ROAS). The platform warns that individual conversions may return more or less than the target, and a target that is too high can limit traffic volume (Google Ads Help). To judge profit rather than revenue, specialists use ROMI and margin after ads.

Common mistakes

  • Comparing ROAS to a "norm" from the internet. An acceptable ROAS depends on your margin.
  • Ignoring returns and unclaimed orders, especially cash on delivery with Nova Poshta.
  • Taking revenue from the ad account without checking it against the CRM. The account may credit one purchase to several channels.
  • Judging only the first order. Ads with a low ROAS may bring in customers with a high LTV.

FAQ

What is ROAS in plain words? How many hryvnias of revenue the ads brought for each hryvnia spent.

How do I calculate ROAS? Divide the revenue from ads by the ad spend.

What ROAS counts as good? One that is above break-even. Break-even ROAS equals one divided by the margin.

How is ROAS different from ROI and ROMI? ROAS counts revenue against ad spend; ROI and ROMI count profit after cost of goods and other expenses.

Sources

Want to check this on your store?

Audit

We review the customer journey, catalog, technical state and data. A prioritized plan of changes in three days.

About the service →

Share

Related

  • Session recordings and heatmaps

    | Article: 3 min read

    A session recording is a replay of how one visitor used a site: where they moved the cursor, where they clicked, how they scrolled. A heatmap is a summary of such actions by many visitors on one page: where they click and how far they scroll. They show what…

  • LTV (customer lifetime value)

    | Article: 5 min read

    LTV (lifetime value, also CLV or CLTV) is the amount a customer brings to the store over the whole time of the relationship. For management decisions it is better to calculate it not in revenue but in margin: how much money the store keeps from all of the…

  • Incrementality and media mix models

    | Article: 3 min read

    Incrementality is the share of sales that advertising delivered on top of what the store would have received without it. If a person would have bought from you anyway, the ad added nothing with them, even though the report records them as a conversion. A…

  • CAC (customer acquisition cost)

    | Article: 5 min read

    CAC (customer acquisition cost) is the amount a store spends to get one new customer: all marketing and sales costs for a period divided by the number of customers who bought for the first time in that period.