What is ROAS (Return on Ad Spend)?
In short
ROAS, or return on ad spend, is the revenue an advertising campaign produced divided by what it cost. Spend 1,000 and generate 5,000 in sales and the ROAS is 5x. It answers one question only: how much revenue each unit of ad budget brought back, before any other cost is subtracted.
ROAS is the primary metric used to evaluate the performance of Google Ads and Meta campaigns, from a single ad group up to the whole account.
What ROAS does and does not tell you
ROAS is measured against revenue, not profit. A campaign at 5x looks excellent on a product with a healthy margin and can still lose money on one sold nearly at cost, once shipping, packaging, payment fees and returns are counted. The honest version of the question is what ROAS your margin requires in order to break even.
The level you measure at matters just as much. Account-level ROAS hides the campaign that carries everything and the one that quietly burns budget. Campaign, ad group and product-level figures are where decisions are actually made.
Attribution is the third trap. The revenue in the ads platform is the revenue that platform claims, using its own window and rules. If two platforms both claim the same order, the totals will never match the store's own reports, and only one of those numbers pays the bills.
Why it matters for an online store in the EU
Advertising costs vary widely between EU markets, and so does what a customer is worth there: different delivery costs, different return rates, different average baskets. The same campaign can be profitable in one country and a loss in the one next door, at exactly the same ROAS.
A concrete example: a store advertising in several countries may see a strong overall figure while one market quietly drags the account down through returns that never appear in the ads dashboard. Breaking ROAS down by market, and comparing it against the store's own order data, is what turns the metric into a decision.
Common mistakes
- Treating ROAS as profit, without subtracting product cost, shipping, fees and returns.
- Judging a campaign after a couple of days, on very few conversions.
- Comparing platforms directly, although each uses its own attribution window.
- Optimising only for the highest ROAS, which usually means advertising to people who would have bought anyway.
- Ignoring repeat purchases, so campaigns that acquire loyal customers look worse than they are.
Related terms
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Try ShopifyFrequently asked questions about ROAS
What is a good ROAS?
There is no universal number, because it depends entirely on your margin. Work out what share of the selling price stays with you after product cost, shipping, fees and returns, and the break-even ROAS follows from that. Anything above it is profit; the same figure can be excellent for one store and fatal for another.
Why does the ads platform show more revenue than my store?
Because each platform credits itself for orders it believes it influenced, within its own attribution window, and two platforms can claim the same order. Use the platform figure to compare campaigns against each other, and your own order data to decide whether the total advertising effort is actually paying off.
ROAS or CAC — which should I follow?
Both, for different questions. ROAS tells you how efficiently a campaign converts budget into revenue right now. CAC tells you what a new customer costs, which only makes sense next to their lifetime value. Stores with repeat purchases usually plan with CAC and monitor campaigns day to day with ROAS.