Last Updated: March 5, 2025
Reading time: 10 min

What is ROAS?

Return on Ad Spend (ROAS) is a marketing metric that measures the revenue generated for every dollar spent on advertising. Along with Cost Per Acquisition (CPA), it helps businesses evaluate the effectiveness of their advertising campaigns and make data-driven decisions about their marketing investments.

ROAS is particularly important for digital marketers and e-commerce businesses as it provides a clear picture of advertising efficiency across different channels and campaigns. Use our Budget Allocator to optimize your spending based on ROAS performance.

How to Calculate ROAS

To calculate ROAS, divide your total revenue from advertising by your total advertising spend. Use our Daily Budget Calculator to plan your campaign spending effectively:

ROAS = Revenue from Ads / Ad Spend

ROAS Formula

The basic ROAS formula is:

ROAS = (Revenue Generated from Advertising) ÷ (Cost of Advertising)

For example, if you spent $1,000 on advertising and generated $5,000 in revenue:

ROAS = $5,000 ÷ $1,000 = 5 (or 5:1)

What is a Good ROAS?

A good ROAS depends on your industry and business model, but generally:

  • 4:1 (4x) or higher - Excellent performance
  • 3:1 to 4:1 - Good performance
  • 2:1 to 3:1 - Average performance
  • Below 2:1 - Needs improvement (consider reviewing your CPM rates and campaign targeting)

ROAS Calculator

Advanced ROAS Calculator (Multi-Channel)

Google Ads

Facebook Ads

TikTok Ads

LinkedIn Ads

Amazon Ads

Channel Performance
Channel Spend Revenue ROAS
Total (Blended) - - -
Channel Comparison Chart

ROAS Goals Tracker

Set your target ROAS and track your progress toward achieving your goals. This tool helps you monitor performance and identify when adjustments are needed.

Goal Progress

Profit Margin & True Profitability Calculator

Calculate your true profitability by factoring in Cost of Goods Sold (COGS). ROAS alone doesn't tell the complete story - understanding profit margins is critical for sustainable growth.

ROAS
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Gross Profit
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Net Profit
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Profit Margin
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Break-Even ROAS Calculator

Calculate the minimum ROAS you need to break even based on your profit margins. This is essential for setting realistic campaign targets.

Your profit margin before advertising costs
Your desired profit margin after advertising costs

ROAS Forecasting

Predict future ROAS performance based on historical trends. Enter at least 3 months of data for accurate forecasting.

Enter Historical ROAS Data
Trend
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Next Month Forecast
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90-Day Forecast
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Historical ROAS Trends

Visualize your ROAS performance over time to identify patterns, seasonal trends, and optimization opportunities.

Enter Monthly ROAS Data

Export ROAS Report

Generate a comprehensive PDF report with all your ROAS calculations, charts, and insights.

Report Options

Campaign Assumptions

When calculating ROAS, consider these important factors:

  • All revenue is attributed to advertising efforts
  • Attribution windows are properly set (use our UTM Builder for accurate tracking)
  • Indirect revenue effects are not included
  • Time periods match for spend and revenue (plan with our Campaign Scheduler)

Calculation Example

Here's a practical example of calculating ROAS across multiple channels:

Monthly Ad Campaign:

  • Facebook Ads: Spend $1,000, Revenue $4,000 (ROAS: 4.0)
  • Google Ads: Spend $2,000, Revenue $7,000 (ROAS: 3.5)
  • TikTok Ads: Spend $500, Revenue $1,500 (ROAS: 3.0)

Blended ROAS: ($4,000 + $7,000 + $1,500) ÷ ($1,000 + $2,000 + $500) = $12,500 ÷ $3,500 = 3.57

Use our Budget Allocator to optimize distribution across these channels based on performance.

ROAS Analysis

When analyzing your ROAS, consider:

  • Industry benchmarks and competition
  • Profit margins and business model
  • Customer lifetime value
  • Seasonal variations (plan with our Campaign Scheduler)
  • Campaign objectives
  • Creative performance (validate with our Creative Specs Checker)