Return on Ad Spend (ROAS) is a digital marketing metric measuring the revenue generated for every unit of currency spent on advertising, calculated as advertising revenue divided by advertising cost.
ROAS is expressed as a ratio or multiple: a campaign that earns $5,000 from $1,000 in ad spend has a ROAS of 5, often written 5:1 or 500%. It can be measured at any level — a single ad, a campaign, a channel, or an entire account — making it a common yardstick for comparing the revenue efficiency of different advertising investments.
Unlike engagement metrics, ROAS ties advertising directly to revenue, which makes it central to budget allocation: spend flows toward the campaigns returning the most per dollar. A meaningful target depends on margin — the breakeven ROAS is the inverse of profit margin, so a business with thin margins needs a far higher ROAS to profit than one with high margins. ROAS measures gross revenue against ad cost and does not by itself account for product costs, fulfillment, or overhead.
ROAS sits downstream of engagement measures such as 📝Click-Through Rate (CTR) and upstream of whole-business profitability measures such as return on investment, which factors in all costs rather than ad spend alone. Because it ignores non-advertising costs, ROAS is best read alongside margin and lifetime-value data rather than treated as a standalone measure of success.