What is ROAS (Return on Ad Spend)?

ROAS is one of the most important metrics for measuring advertising campaign success. It tells you exactly how much revenue you’re generating for every dollar spent on ads. Think of it as the ROI specifically for your advertising efforts.

Why ROAS matters:

• Campaign Performance: Instantly see which ads are profitable and which are draining your budget
• Budget Optimization: Make smarter decisions about where to allocate your advertising dollars
• Growth Planning: Understand your true customer acquisition costs and plan for sustainable growth

How to Calculate ROAS

The ROAS formula is simple:

ROAS = Revenue from Ads / Ad Spend

For example:

• If you spend $1,000 on ads and generate $4,000 in revenue
• Your ROAS is 4:1 (or 400%)
• This means you earn $4 for every $1 spent on advertising

Understanding Your ROAS Results

• ROAS below 1:1 - You’re losing money on ads
• ROAS of 1:1 - You’re breaking even
• ROAS of 2:1 or higher - You’re making profit (though consider other costs too)
• ROAS of 3:1 or higher - Generally considered good for most industries

Using This ROAS Calculator

1. Enter Your Ad Spend: Input the total amount spent on your advertising campaign
2. Enter Revenue Generated: Input the total revenue directly attributed to those ads

The calculator will show you:

• Your ROAS ratio
• Net profit from the campaign
• Profit margin percentage
• Return percentage on your investment

Important Considerations

While ROAS is crucial, remember:

• Other Costs: ROAS doesn’t include operational costs, only ad spend
• Attribution: Make sure you’re accurately tracking which sales came from ads
• Time Frame: Consider the full customer lifetime value, not just immediate sales
• Industry Standards: Good ROAS varies by industry - ecommerce might target 4:1 while SaaS could be profitable at 3:1

Use this free ROAS calculator to quickly evaluate your advertising campaigns and make data-driven decisions about your marketing budget.