In more detail
ROAS tells you whether a paid campaign is actually making money, not just getting clicks. It is usually written as a ratio (4:1) or a number (4x), meaning 4 dollars back for every 1 dollar spent. It differs from ROI because ROAS measures revenue against ad cost alone, while ROI accounts for all your costs, including product, shipping, and overhead. That gap matters: a campaign can show a strong ROAS and still lose money once margins are factored in.
Example
If you spend 500 dollars on a campaign and it brings in 2,000 dollars in sales, your ROAS is 4x (2,000 divided by 500). A 4x ROAS is a common starting benchmark, but the number you actually need depends on your profit margins.
FAQ
ROAS, answered.
What is a good ROAS?
A 4x ROAS (4 dollars earned per 1 dollar spent) is a common target, but it depends on your margins. High-margin businesses can profit at 2x or 3x, while low-margin ones may need 6x or more.
What is the difference between ROAS and ROI?
ROAS compares revenue only to ad spend. ROI compares profit to your total costs, including the product, shipping, and overhead. ROI is the more complete picture of whether you actually made money.
