ROAS (return on ad spend)
Also called: return on ad spend
ROAS is the revenue your ads brought in divided by what you spent on them.
Formula
ROAS = revenue from ads ÷ ad spend
Example: $2,000 of spend that drove $7,000 in sales is a ROAS of 3.5x.
A ROAS of 3 (often written 3x or 300%) means every $1 of ads returned $3 in revenue. ROAS ignores product costs, so a 3x ROAS can still lose money on a low-margin product. The break-even ROAS is 1 ÷ your gross margin: at a 40% margin you need 2.5x just to break even on the first order.
Go deeper
Part of the Addy video ad glossary. Addy is an AI agent that writes, renders and posts short-form video ads.