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PerformanceTerm

ROAS

Return on Ad Spend · advertising payback

ROAS (Return on Ad Spend) - revenue ÷ advertising budget. ROAS 3× means each invested ruble returned 3 rubles in revenue.

ROAS - Return on Ad Spend, return on advertising investment: revenue from an advertising campaign ÷ budget spent on it. ROAS 3× means that every ruble invested returned 3 rubles in revenue.

ROAS is the main metric by which the client evaluates the work of a marketer. A healthy ROAS depends on the product margin: if you have an e-com with a 30% margin, ROAS 3.5x is a break-even, and ROAS 6x is a good profit. If the margin is 15% (for example, an equipment dealer), the ROAS should be at least 7–8x.

In my current projects, the average ROAS is 3.2×. The best projects (gaming) give 5.2×, the worst (b2b SaaS with a long transaction cycle) - 1.8×, which is normal for b2b where LTV is high and the sale pays off in 3-6 months.

ROAS does not take into account LTV (customer lifetime value). So for subscription models and repeat purchase products, I consider LTV-adjusted ROAS = (first month revenue + expected LTV × likelihood of repeat purchase) ÷ budget. This gives a fair picture of the payback.

ROAS / ROMI / DRR calculator →

Frequently asked questions about ROAS

What is ROAS in simple words?+
ROAS - Return on Ad Spend, the ratio of advertising revenue to advertising costs. ROAS 4x means “received 4 rubles in revenue for every ruble of advertising.” Main metric for e-com and FMCG.
Is ROAS 4x good?+
Depends on the margin. With a margin of 25%, the break-even point is ROAS = 4x, that is, 4x is zero profit. With a margin of 50%, break-even = 2x, and ROAS 4x = double profit.
How is ROAS different from ROI?+
ROAS only considers advertising costs and revenue (income). ROI considers all profits taking into account all costs: advertising + COGS + operating system. ROAS is a performance metric, ROI is a financial metric.
Why is my ROAS falling?+
Three typical reasons: creative burnout (CTR falls → CPC increases), auction competition in the niche, deterioration in the quality of the audience (LAL for buyers is depleted). It is treated with fresh creatives and expansion of segments.

Related terms

ROILTVCACCPL

Where is it understood in practice?

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