SEO glossary · R

Return on Ad Spend (ROAS)

What is Return on Ad Spend (ROAS)?

Return on ad spend (ROAS) measures how much revenue you earn for every krona, euro or dollar spent on advertising. If a campaign costs 10,000 kr and brings in 40,000 kr in sales, its ROAS is 4, often written as 4:1 or 400%.

How to calculate ROAS

ROAS = revenue from ads ÷ cost of ads

ROAS vs ROI

ROAS only compares ad revenue with ad costs. Return on investment (ROI) looks at profit after all costs, including the products you sold, staff and fees. A campaign can have a ROAS of 3 and still lose money if your profit margin is low.

What is a good ROAS?

It depends on your margins. Work out your break-even ROAS first: 1 divided by your profit margin. With a 25% margin, you need a ROAS of 4 just to cover the ad costs; anything above that is profit. In Google Ads, you can bid automatically towards a chosen ROAS with the Target ROAS strategy.

Estimate clicks, leads and ROAS from your budget with our free Ads ROI calculator.

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