What is Return on Ad Spend?
Revenue generated for each unit of advertising spend.
How to calculate it
Calculate Return on Ad Spend as: Revenue from ads / Ad spend. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
$20,000 ad spend drives $90,000 revenue -> 4.5:1 ROAS. Check it against margin, not just revenue.
Example 2
A campaign spends $25k and drives $112k in revenue -> 4.5:1 ROAS. At a 40% gross margin, real contribution is $45k, still comfortably profitable.
Why it matters
Return on ad spend (ROAS) shows the revenue generated for each unit of advertising spend and is the most direct measure of paid-channel profitability. It guides budget allocation across campaigns and channels in close to real time. Because it uses revenue rather than margin, it should be sense-checked against contribution margin before declaring a channel profitable.
Benchmark context
4:1 is a common baseline, but the true break-even depends on your gross margin; a low-margin business needs a much higher ROAS to profit.
Common pitfalls
Attributing all revenue to last click.
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