What is ROAS?
ROAS (return on ad spend) measures how much revenue you earn for every dollar you spend on advertising. A ROAS of 5.00× means every $1 spent brought back $5 in revenue — $10,000 in revenue from $2,000 in ad spend, for example.
ROAS = Ad Revenue ÷ Ad Spend Working backward from a target ROAS
The same relationship rearranges two other useful ways. If you know how much you're planning to spend and what ROAS you're aiming for, you can find the revenue that target implies:
Required Ad Revenue = Ad Spend × Target ROAS Or, if you have a specific revenue goal and a target ROAS, you can find the maximum you can spend while still achieving that target:
Maximum Ad Spend = Ad Revenue Target ÷ Target ROAS All three are the same relationship, just solved for a different variable — which is why the calculator's three tabs always agree with each other for the same numbers.
Frequently asked questions
What's a good ROAS?
There is no universal good ROAS. The ROAS you need depends on your profit margins and other costs. A business with thin margins may need a much higher ROAS to be profitable, while a business with high margins may be profitable at a lower ROAS. ROAS alone doesn't account for costs such as cost of goods, shipping, payment fees, and overhead, so it isn't a measure of profitability by itself.
What's the difference between ROAS and ROI?
ROAS compares attributed revenue to ad spend specifically. ROI measures the return relative to an investment, typically using profit after the relevant costs are deducted. A campaign can have a strong ROAS and still be unprofitable once costs such as products, shipping, payment fees, and other expenses are included, so the two metrics answer different questions.
Does a higher ROAS always mean higher profit?
No. ROAS measures revenue generated per dollar of ad spend, not profit. A 5× ROAS means $5 of attributed revenue for every $1 of ad spend, but whether that is profitable depends on your product margins and other costs.
Why can't Target ROAS be 0?
A Target ROAS of 0× cannot be used because the Required Ad Spend calculation divides the revenue target by Target ROAS. Dividing by zero is undefined, so Target ROAS must be greater than 0.