In plain English
It's checking whether the seeds you bought grew more than they cost. Planting more makes sense only if each packet comes back as a bigger harvest.
Used in a sentence
“Search ads have a strong ROAS; the display campaign doesn't, so we moved its budget across.”
“We were proud of how many clicks we got until we worked out the ROAS.”
In detail
ROAS is revenue from ads divided by ad spend, often written as a ratio or a multiple. It needs conversion tracking with values attached, which is simple for online stores and harder for service businesses where the sale happens later, by phone or in person. There, a value per lead, based on how often leads become jobs, is a practical stand-in.
ROAS is about revenue, not profit. A healthy number depends on your margins: a business with thin margins needs a higher return to break even than one with wide margins. It's best used to compare campaigns and decide where the next dollar should go.
Why it matters for your business
ROAS turns ad reports into a simple question: which campaigns earn more than they cost?
- Compares campaigns fairly
- Shows where to move budget
- Needs conversion tracking with values
Easy to mix up
ROAS isn't the same as ROI. ROAS compares revenue with ad spend only; ROI accounts for all costs, including the work, the product and the overheads.
Related terms
Conversion tracking, CPC and PPC. Or browse the whole glossary.
