Digital Lexicon Hub

Advertising-attributed revenue divided by advertising cost, usually expressed as a ratio or percentage.

ROAS tells marketers which campaigns, channels and keywords return the most revenue per dollar of media, which guides budget shifts and sets targets for automated bidding strategies such as Target ROAS.

A campaign spends $8,000 in a month and records $36,000 in attributed conversion value. ROAS is $36,000 divided by $8,000, or 4.5 (450%), so the team sets a 400% Target ROAS to keep some headroom.

ROAS uses revenue, not profit, so a high ROAS can still lose money after product costs, fees and returns. It also depends on the attribution model and can reward campaigns that capture demand that would have converted anyway.

ROAS equals attributed conversion value divided by advertising cost; multiplying by 100 gives a percentage. In Google Ads it is reported as conversion value per cost. A break-even ROAS can be estimated as 1 divided by the gross margin, so a 25% margin needs a ROAS of at least 4 to cover media costs.