ROAS, or return on ad spend, is the conversion value that each euro spent on advertising brings back: 4,000 EUR in sales for 1,000 EUR spent gives a ROAS of 4, or 400%. You can read it as an exchange rate between your ads and your sales.

You use it to compare campaigns with each other and to check that each euro you invest comes back with enough margin. It matters most for online stores, and for any business that sends a value with its conversions. On the e-commerce accounts I audit, most teams steer everything on ROAS: it is the metric to read well before the others. Here you get the formula, a real example, the threshold that tells you if your ROAS is profitable, and what sets it apart from ROI and MER.

What Is ROAS Used For

ROAS brings every campaign back to the same question: what does one euro bring back? It gives you three things:

  • Compare campaigns: two campaigns that spend different amounts compare on what each euro brings back.
  • Steer a bid strategy: Google Ads sets its bids on a Target ROAS, and Meta offers a minimum ROAS strategy, LOWEST_COST_WITH_MIN_ROAS in its bid strategy documentation.
  • Set a profitability floor: next to your margin, ROAS tells you if a campaign makes or loses money.

How ROAS Is Calculated

The formula divides what the ads brought back by what they cost:

ROAS = conversion value ÷ cost

You can write the result as a ratio (4) or as a percentage (400%). The Google Ads help on Target ROAS gives its own example: 5 USD in sales ÷ 1 USD in ad spend × 100% = 500% target ROAS. In the interface, the column is called "Conv. value/cost", in the list of "Conversions" columns, and Google advises multiplying it by 100 to get a percentage.

At Meta, the purchase_roas field of the Marketing API Insights reference gives the total return on ad spend from purchases, based on information received from your connected Meta Business Tools, like the pixel, and attributed to your ads.

Keep the exchange rate image in mind. It tells you how many euros of sales you get for one euro of ads, and your margin decides what is left. The break-even and target ROAS calculator runs the calculation both ways.

A Real Example: Search Against Shopping On The Same Store

On an online store I work with, every Google Ads campaign optimizes for the same main conversion, the purchase. Over the 90 days ending on October 15, 2026:

  • Search: 2,071 EUR spent, 9,835 EUR in conversion value, a ROAS of 4.75, or 475%.
  • Shopping: 8,121 EUR spent, 24,140 EUR in conversion value, a ROAS of 2.97, or 297%.

Search has the better ROAS, and Shopping brings 2.5 times more conversion value. Both numbers are averages: they tell you what the euros already spent brought back. A budget decision is about the next euro, and it has its own metric, marginal ROAS: the change in conversion value divided by the change in spend. The article on marginal ROAS shows how to read it before you raise a budget.

The Profitability Threshold: Break-Even ROAS

ROAS counts euros of sales. What stays in your pocket depends on your gross margin, and the threshold is easy to calculate:

break-even ROAS = 1 ÷ gross margin

  • With a 40% margin, the floor is 2.5.
  • With a 25% margin, it is 4.
  • With a 20% margin, it is 5.

Take two products with the same ROAS of 4. With a 40% margin, each euro of ads brings back 1.60 EUR of gross margin: you keep 0.60 EUR. With a 20% margin, it brings back 0.80 EUR, and you lose 0.20 EUR for each euro spent. The same ROAS gives a gain on one side and a loss on the other. An account steered on ROAS alone mechanically over-invests in low-margin products.

Two columns of the same height, two products with the same ROAS of 4: the spend block lands on the margin, a gain is left above it with a 40% margin, and it spills over into a loss with a 20% margin

That is the calculation I run before touching a budget: it starts from your margin. The target then goes above the floor, based on the profit you aim for, and that is the best reason to keep your margin next to your ROAS!

ROAS, ROI Or MER: Three Metrics For Three Questions

The three look alike and answer three different questions:

  • ROAS: how much in sales one euro of ads brings back, campaign by campaign.
  • ROI: how much profit your investment brings back. The Google Ads help on ROI defines it as the ratio of your net profit to your costs, with one possible formula: (Revenue - Cost of goods sold) / Cost of goods sold. In its example, 1,200 USD in sales for 800 USD in total costs, ads included, give an ROI of 50%.
  • MER: your total revenue divided by your total marketing spend, across all channels, over the same period. It judges the whole, while each ROAS judges its own channel, as the article ROAS vs MER shows.

In Google's example, the 200 USD of ads brought 1,200 USD in sales: a ROAS of 6. So a ROAS of 6 and an ROI of 50% describe the same campaign, seen from two places. One version of ROAS replaces revenue with margin: POAS. The paid media metrics page sets the rule for e-commerce: ROAS to steer, POAS to tell the truth, break-even ROAS as the floor.

Common Mistakes With ROAS

  • Judging the last few days: a sale sometimes comes several days after the click. Google asks you to make sure the ROAS evaluation period excludes the most recent conversion delay period. Meta, in its ROAS ad rules, gives the example of a window that leaves out the last 7 days, because their data is still immature.
  • Aiming too high: Google warns that a target ROAS set too high may limit the traffic your ads get.
  • Mixing conversions: ROAS is only as good as the value you send. The Include in "Conversions" setting decides which actions go into the "Conversions" and "Conversion value" columns that bid strategies read. Check which actions carry a value before you read your ROAS.
  • Comparing two ROAS numbers without the margin: a ROAS of 4 on a product with a 40% margin and a ROAS of 4 on a product with a 20% margin tell two opposite stories.

The Limits Of ROAS

ROAS looks at the sale credited to the ads. The value of a customer who comes back to buy again needs another metric, the ratio between their lifetime value and their acquisition cost, explained in how to track the CLV to CAC ratio.

It also counts the sales each ad platform credits to itself with its own rules. To know which sales your ads caused, the answer comes from a test with a control group: the incremental ROAS calculator compares the result of that test with your reported ROAS.

The Three Most Searched Questions About ROAS

What is a good ROAS? A ROAS above your profitability threshold, which equals 1 divided by your gross margin. With a 40% margin, the floor is 2.5; with 25%, it is 4. The target goes above it, based on the profit you aim for. So you judge a good ROAS with your margin in front of you, product by product.

What is Target ROAS? It is the Google Ads bid strategy that aims for an average conversion value for each euro spent. With 500%, Google looks for 5 EUR in sales for 1 EUR of ads, and bids higher on searches likely to bring a high-value conversion. Conversions need a value greater than 0 to count.

Is ROAS a ratio or a percentage? Both mean the same number. The "Conv. value/cost" column in Google Ads gives a ratio, like 4.75, and you set Target ROAS as a percentage, like 475%. The Google help says it: multiply the conversion value per cost by 100 to get your Target ROAS percent.

My recommendation is to judge your advertising on what it leaves at EBITDA: ROAS is the first floor of that calculation, and your margin and fixed costs do the rest. To run this calculation on your own numbers, see the growth marketing service or the Google Ads audit.