ROASReturn on Ad Spend
ROAS measures revenue generated for every dollar of ad spend. A 4× ROAS means $4 in revenue for each $1 spent.
ROAS = Attributed Revenue / Ad SpendWhat does ROAS actually mean?
Return on Ad Spend (ROAS) is the dominant performance metric across paid social and search. It measures revenue attributed to advertising divided by ad spend over a given window. ROAS is a gross metric. It doesn't account for COGS, fulfillment, returns or LTV, so high-ROAS campaigns can still be unprofitable if margins are thin.
Most DTC brands target a blended ROAS that, after accounting for margin, breaks even on first purchase. The actual ROAS target depends on AOV, contribution margin, and how heavily the brand discounts customer acquisition against future LTV. A subscription business with $200 LTV can profitably run a 1.5× ROAS; a one-shot product with 30% gross margin needs 4×+ to break even.
ROAS is reported by ad platforms (Meta, TikTok, Google) using their attribution windows, which routinely overstate true incrementality. Modern teams cross-reference platform ROAS against MMM (media mix modeling) or post-purchase surveys to estimate the real number.
Example
A Shopify brand spent $5,000 on Meta ads and the platform attributed $18,000 in revenue to those campaigns. Reported ROAS = 3.6×.
When it matters
Every paid-social and paid-search performance review uses ROAS as the primary KPI. Because platform ROAS is noisy, judge a new creative against your own account's recent baseline rather than a generic industry benchmark.
Related terms
MER
MER is total revenue divided by total ad spend. It's a blended, top-down profitability metric that's harder to game than platform ROAS.
Blended ROAS
Blended ROAS is total revenue divided by total ad spend across all channels. It's equivalent to MER, the honest top-down ad efficiency metric.
ACoS
ACoS is Amazon's primary PPC metric: ad spend divided by sales attributed to that spend, expressed as a percentage. Lower is better.
ROI
ROI is profit (revenue minus cost) divided by cost. Unlike ROAS, ROI accounts for COGS, fulfillment and overhead.
AOV
AOV is the average revenue per order. Increasing AOV is one of three core levers for ecommerce growth (alongside traffic and conversion rate).
CAC
CAC is the total cost of acquiring one new paying customer, including ads, salaries and tooling. It's broader than CPA.
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